Economic Loss and Psychiatric Harm

Question 1

What is the general rule regarding pure economic loss in negligence?

Answer 1

Generally, a defendant does not owe a duty of care to avoid causing pure economic loss, and such losses are not recoverable

Question 2

What constitutes pure economic loss in the case of a defective property?

Answer 2

Economic loss caused by a defective item that doesn’t result in physical damage to other property or personal injury

Question 3

Under what condition does acquiring a defective item of property lead to a duty of care?

Answer 3

If the defective item causes personal injury or damage to other property, a duty of care may arise

Question 4

What was the ruling in Spartan Steel & Alloys Ltd v Martin & Co regarding pure economic loss?

Answer 4

Only direct damage to the claimant’s property and the associated loss of profit were recoverable, but loss of profits on future production was not

Question 5

When can economic loss due to a negligent statement be recovered?

Answer 5

When a “special relationship” exists, demonstrated by the Hedley Byrne principle involving an assumption of responsibility and reasonable reliance

Question 6

What are the two key elements of a special relationship under Hedley Byrne?

Answer 6

The defendant’s assumption of responsibility and the claimant’s reasonable reliance on the statement

Question 7

What four criteria must be met under Caparo for a duty of care in negligent statements?

Answer 7

Defendant knew the purpose of the advice, 2) knew it would be communicated, 3) claimant likely to rely without inquiry, 4) claimant acted to their detriment

Question 8

What is the general rule regarding pure psychiatric harm in negligence?

Answer 8

Generally, defendants do not owe a duty of care to avoid causing pure psychiatric harm unless specific criteria are met

Question 9

How is pure psychiatric harm defined?

Answer 9

Psychiatric harm without any physical impact, often involving medically recognized illnesses caused by sudden shock

Question 10

What are the limiting factors for duty of care in pure psychiatric harm cases?

Answer 10

The harm must be caused by sudden shock and result in a recognised psychiatric illness or shock-induced physical condition

Question 11

Who qualifies as a primary victim in cases of pure psychiatric harm?

Answer 11

A primary victim is directly involved in the incident, either within the danger zone or reasonably believing they were in danger

Question 12

Who qualifies as a secondary victim in cases of pure psychiatric harm?

Answer 12

A secondary victim witnesses injury to someone else or fears for another person’s safety but is not directly endangered

Question 13

What are the Alcock control mechanisms for secondary victims?

Answer 13

1) Foreseeability of psychiatric harm, 2) proximity of relationship, 3) proximity in time and space, and 4) proximity of perception

Question 14

What is the foreseeability requirement for secondary victims in psychiatric harm cases?

Answer 14

It must be reasonably foreseeable that a person of normal fortitude in the claimant’s position would suffer psychiatric harm

Question 15

What does proximity of relationship mean under Alcock?

Answer 15

Claimants must have a close relationship of love and affection with the person endangered by the defendant’s negligence

Question 16

What are the proximity in time and space requirements for secondary victims?

Answer 16

The claimant must be present at the accident or its immediate aftermath and experience the event with their own senses

Question 17

In which circumstances is there a presumption of proximity of relationship?

Answer 17

Where a relationship of parent-child, husband-wife, and fiance-fiancee exists.

Question 18

What does the case of White v Chief Constable of South Yorkshire Police establish regarding rescuers?

Answer 18

Rescuers are treated like any other victims in psychiatric harm claims; they must be in actual danger to be primary victims, otherwise they are secondary victims