Economic loss Flashcards
What can you claim
you cannot claim PURE economic loss. This is economic loss not caused by the physical injury or damage. This is RULE 1
RULE 2 There is an exception for economic loss arising from negligent misstatement.
Rule 2 – losses caused by negligent misstatement
2 situations
●2 party liability This is where person A makes a statement to person B, who suffers a loss as a result of relying on it.
NB – Normally this would be a claim in contract – but there may be no contract if B didn’t pay A. So B would need to show A was negligent and had a duty of care to B
●3 party liability. This is where A makes a statement to B; who passes it on to C; who relies on it and suffers loss.
●Essentially the rules in both situations are the same – but fig 2 is much less likely to succeed!
Hedley Byrne v Heller
Held – There could be a claim for negligent misstatement if:
●1. the statement was made negligently
●2. there was a special relationship between the parties.
WHAT IS A “SPECIAL RELATIONSHIP” or “sufficient Proximity”
Caparo v Dickman – you must prove ALL of the following:
*The person giving advice must possess a special skill or expertise. This could be a recognised qualification or just holding themselves out as having some special skill or knowledge.
*D must know it is highly likely that the C will rely on the statement – -The advice is communicated directly to the C not by a third party or by third party means such as a newspaper TV or Radio
-There is no disclaimer to act as a defence
-The person giving the advice knows that it is being required for a purpose described to the defendant at the time. The D must also know it will be acted upon without taking any further independent advice.
*Is it a social situation? – this may make it less likely that the D think it will be relied upon.
*C does rely on it and thereby incurs financial loss.
*There is reasonable reliance
