4. Pure Economic Loss

Question 1

General Rule: Pure Economic Loss

Answer 1

There is no duty of care owed in the tort of negligence for pure economic loss

Question 2

DEF: Pure Economic Loss

Answer 2

Financial Loss caused without a physical damage or impact to the claimant’s person or property
- Acquiring a defective item of property
- loss caused by physical damage to a third party’s property
- No physical damage - actions
- no physical damage - statements (ie., advice)

Question 3

Exception to the general rule wrt PEL and duty of care

Answer 3

A duty can be owed for negligent statements caused PEL IF there is a special relationship:
1) There is an assumption of responsibility by the defendant
2) the claimants reliance on the advice is reasonable

Question 4

Negligent Statements: what is required to show that D has assumed responsibility for C?

Answer 4

a. D knows purpose of the advice
b. D knows advice will be communicated to C
c. D knows C is likely to act on this advice without independent enquiry
d. C acts on advice to their detriment

Question 5

Negligent Statements: when would it be UNREASONABLE for C to rely on D’s advice?

Answer 5

In a social situation

Question 6

General Rule: Job references

Answer 6

• If C suffers a loss due to untrue job reference, D may owe them a duty of care

Question 7

Defence most commonly used in PEL claims

Answer 7

Exclusion of liability

Question 8

When can a defendant rely on an exclusion notice to defend a negligence claim for PEL? What steps must they have taken?

Answer 8

1. Reasonable steps must have been taken to bring the exclusion notice to the claimant’s attention prior to the tort
2. the wording of the notice must COVER the loss suffered by the claimant

Question 9

Statutory authority limiting ability of defendant to exclude liability?

Answer 9

1. Unfair Contract Terms Act 1977
2. Consumer Rights Act 2015

Question 10

When is UCTA 1977 applicable?

Answer 10

1. defendant is acting in the course of a business (C can be not a consumer)

Question 11

When is CRA 2015 applicable?

Answer 11

When the defendant is acting as a ‘trader’ (for purposes relating to their trade, business, craft or profession) and claimant is acting as a consumer

Question 12

What CANT a claimant exclude liability for (under negligence) in UCTA and the CRA

Answer 12

The defendant cannot exclude liability for death or personal injury resulting from negligent

Question 13

What CAN a defendant exclude liability for under UCTA / CRA, what conditions must be satisfied?

Answer 13

1. D can exclude liability for any other type of loss or damage (aside from death or personal injury resulting from negligence)
2. Must satisfy criteria of ‘reasonableness’ in UCTA or ‘fairness’ in CRA

Question 14

What factors must be considered when deciding whether an exclusion notice is reasonable?

Answer 14

1. bargaining power of the parties - equal or unequal
2. For advice, whether it would have been practicable to obtain the advice from another source taking into consideration costs and time
3. how difficult is the task being undertaken
4. what are the practical consequences (eg. sums of money at stake and ability of the parties to bear the loss involved), particularly in light of insurance?