Economic Loss

Question 1

What is economic loss?

Answer 1

money loss suffered due to the D’s negligence

Question 2

What are the three types of economic loss?

Answer 2

-Pure economic loss
-Consequential economic loss
-Negligent misstatement

Question 3

What is pure economic loss? name the key case

Answer 3

loss not connected to any direct physical injury or property damage to the C, cannot claim under tort law (Spartan Steel v Martin)

Question 4

What is consequential economic loss? name the key case

Answer 4

loss directly linked to physical injury or property damage to the C, caused by the D’s negligence (Spartan Steel v Martin)

Question 5

What is negligent misstatement? name the key case

Answer 5

Loss in money caused by reliance on a negligently made statement - Hedley Byrne v Heller set out 4 conditions to prove which would give rise to a special relationship between the two parties (Caparo v Dickman)

Question 6

What is the first stage of negligent misstatement?

Answer 6

D must possess a skill relating to the advice given. The D must have the skill and expertise in the field of the advice

Question 7

What is the side rule for the first stage of negligent misstatement?

Answer 7

Social situations: C cannot rely on advice given in social situtations/informally, unless the person giving advice possesses the relevant expertise as they may have a duty of care (Chaudhry v Prabhaker)

Question 8

What is stage two of negligent misstatement? name the key case

Answer 8

The D knows that it is highly likely the C will rely on the advice given, Mutual Life v Evatt held that a duty arises when the D was in the business of giving the advice, or professed to have a special skill or knowledge

Question 9

What is stage three of negligent misstatement?

Answer 9

The C relies on the advice and suffers financial loss

Question 10

What is stage four of negligent misstatement? name the key case

Answer 10

It must be reasonable for the C to rely on the advice - if there is a relationship of proximity, then it is reasonable to rely on advice (Caparo v Dickman). If the D is in a position of responsibility, then it is also reasonable (White v Jones)

Question 11

What is the side rule for stage four of negligent misstatement? name the key case

Answer 11

Voluntary assumption of a duty - if the D has given advice voluntarily then they have a duty to ensure accuracy (Hedley Byrne v Heller)