4. Pure economic loss Flashcards
Define ‘pure economic loss’
Loss that is purely financial, i.e. does not result from damage to the claimant’s property or person
Define ‘consequential economic loss’
Loss consequent upon damage to the claimant’s property or person
When does a duty of care exist for pure economic loss? What case gives this precedent?
When there is a contract, fraud, or fiduciary duty
Candler v Crane, Christmas & Co
What case sets out the distinction between pure and consequential economic loss?
Spartan Steel and Alloys Ltd v Martin & Co (Contractors) Ltd (1973)
Briefly outline the facts of Spartan Steel and Alloys Ltd v Martin & Co (Contractors) Ltd (1973)
Ds were construction workers who negligently cut through a power cable that supplied C’s factory
This caused a 14.5 hour power cut, resulting in Cs not being able to produce melt in their furnace
C lost the melt in the furnace at the time of the power cut, the profit on that melt, and the profits on further melts they would have made in those 14.5 hours
What was the decision in Spartan Steel and Alloys Ltd v Martin & Co (Contractors) Ltd (1973)?
The melt in the furnace at the time of the power cut was property damage, so recoverable
The profits on this melt were consequential economic loss, so recoverable
The profits that would have been made on further melts were pure economic loss, so not recoverable
What is relational economic loss?
Economic loss to the claimant, caused by the defendant’s negligent damage to a third party’s property or person
When can a claimant recover for relational economic loss?
They cannot
What are the two cases giving precedent for relational economic loss?
Cattle v Stockton Waterworks (1875)
Weller v Foot and Mouth Disease Research Institute (1966)
Briefly outline the facts of Cattle v Stockton Waterworks (1875)
Ds owned a pipe under a third part’s land which they were under a contractual duty to keep in good repair
Third party contracted C to dig a tunnel under a road running through his land
C was unable to do this because D negligently failed to repair the pipe
C lost profit on the contract which he tried to claim from D
What was the decision in Cattle v Stockton Waterworks (1875)?
C only had a contractual interest in the land so was unable to claim damages
C’s loss was PEL
Briefly outline the facts of Weller v Foot and Mouth Disease Research Institute (1966)
Cs were auctioneers of cattle
Ds negligently allowed a disease to escape and infect cows
Cattle market had to close, so C lost profit
What was the decision in Weller v Foot and Mouth Disease Research Institute (1966)?
D might be liable to the owners of the cows (property damage)
C suffered PEL so D not liable
C did not have a proprietary interest in the property that was damaged so could not claim
