Economic Loss

Question 1

Give an introduction for Economic Loss Caused By A Negligent Act.

Answer 1

If someone does something, through a negligent act, resulting in you losing money you can recover damages (different to direct personal injury + direct damage to property)

Question 2

Explain Consequential Loss in relation to Economic Loss Caused By A Negligent Act.

Answer 2

• Spartan Steel v Martin + Co: C can recover damages for any consequential economic loss which arises directly from the physical damage (link neg act to show money has been lost).
• Example: cots of hiring a replacement car while repaired are being carried out.

Question 3

Explain Pure Economic Loss, in relation to Economic Loss Caused By A Negligent Act.

Answer 3

• Weller v Foot + Mouth Disease Research Institute: C won’t be able to claim for ‘pure economic loss’ (‘maybe money’)- economic or financial loss which isn’t caused by physical injury or damage.
• Example: any loss of profit suffered by a business while it’s unable to operate.

Question 4

Explain Economic Loss By Negligent Misstatements.

Answer 4

When D gives C negligent advice, + them following it leads to them loosing money.
Can apply in 2 Situations: (state which)
1) Two-party liability (always this)
A gives advice/makes a statement to B + B suffers loss in relying on it.
2) Three-party liability
A makes a statement to B, who communicates it to C. C then suffers loss in relying on that statement.
* Candler v Crane Christmas + Co: created this liability + ability to claim for bad advice.
* Hedley Byrne v Heller + Partners: Lord Denning’s dissenting judgement in Candler was approved. Claim may be made by those who suffer financial loss as a result of relying on a statement. However, has to be established that:
1) Statement was made negligently
2) There’s a ‘special relationship’ between parties.
* Caparo v Dickman: set out what is needed to prove a special relationship for a negligent
Special Relationship Requires All Of The Following To Be Proved:
* Negligence: 3 points: duty, breach, damage.
* Special Skill: possession of a special skill/expertise on on the part of the person giving advice- doesn’t need to have a qualification.
* Reliance: advice is used + acted upon by C.
* Communication: advice must be communicated directly to C- not through 3rd party means.
* Purpose + Knowledge: person giving advice knows it’s being required for a purpose described at the time to D.
* No Disclaimer
* If all requirements are present + C loses money, loss can be claimed from the person giving advice.
* Advice normally given in a quasi-business situation (an ‘as if’ situation)
* Chaudhury v Parbhakar: special relationship can exist even if advice was given in a social situation.

Question 5

Explain how the defence of Contributory Negligence can be used in relation to Economic Loss.

Answer 5

• Law Reform (Contributory Negligence) Act 1945: any damages awarded to C can be reduced according to extent/level they contributed to their own harm.
• Sayers v Harlow Urban District Council: not a full defence + only results in reduction of damages.
• Jayes v IMI (Kynoch) Ltd: possible for there to be a 100% reduction in damages.
• O’Connell v Jackson: damages can be reduced where motorcyclist fails to wear crash helmet.
• Stinton v Stinton: C accepted lift from drunk driver- knew he was over the limit. Damages were reduced.

Question 6

Explain how the defence of Consent (Volenti Non Fit Injura) can be used in relation to Economic Loss.

Answer 6

• Subjective- takes into account factors
• Full defence, C accepts voluntary assumption of risk of harm.
  To succeed D has to show:
  1) Knowledge of the precise risk involved
  2) Exercies of free choice by C
  3) Voluntary acceptance of risk
• S.149 Road Traffic Act 1998: defence can’t be used for road traffic accidents- as of 3rd party insurance.
• Stermer v Lawson: defence wont apply merely because C knows of existence of risk; must have full understanding of nature of actual risk.
• Smith v Baker: wont succeed where C has no choice but to accept risk.
• Sidaway v Governors of Bethlem Royal + Maudsley Hospitals: consent relevant in medical claims.
• If C acts against employers orders + is injured, defence likely to succeed