Economic Loss

Question 1

Economic loss into part 1- consequential

Answer 1

Consequential economic loss is a loss in money, which is a direct consequence of physical damage caused by negligent acts. This loss is recoverable in tort law (Spartan Steel vs Martin).

Question 2

Economic loss into part 2

Answer 2

Pure economic loss is a loss in money which is not consequent on physical damage to the claimant. This loss is not recoverable under Tort Law (Spartan Steel vs Martin), unless it is due to a negligent misstatement.
- Apply relevant loss, carry on with negligent misstatement if needed.

Question 3

Negligent Misstatement intro

Answer 3

• A negligent Misstatement is where the D makes a statement, the claimant relies on this advice and as a result suffers a pure economic loss.
• Hedley Byrne vs Heller sets out a four stage test which if proven gives rise to a special relationship between the two parties (Caparo vs Dickman).

Question 4

Negligent Misstatement stage 1

Answer 4

• The D must possess a special skill relating to the advice given- this is based on the skill and judgement of the D and the reliance placed upon it.
• Side rule- Social situations (Chaudry vs Prabhaker)- Usually not liable, unless they possess the relevant expertise.

Question 5

Stage 2 of negligent misstatement

Answer 5

• D knows that it was highly likely that the C will rely on that advice.
  -In mutual life vs Evatt it was held that a duty arises when the D is in the business of giving that advice, or had professed to having a special skill or knowledge in the field in which the advice was given.

Question 6

Stage 3 if negligent misstatement

Answer 6

• C must rely on the advice and suffer a financial loss as a result

Question 7

Stage 4 Negligent Misstatement

Answer 7

• It must be reasonable for the C to rely on the advice. - If there is proximity between parties then it is more reliable for the C to rely on the advice of the D (Caparo vs Dickman)
• Also if the D is in a position of power then it is more reasonable (White vs Jones)
• Side rule- Voluntary assumption of duty- giving advice when nobody asked for it (Hedley Byrne vs Heller)