Economic Loss (Negligent Misstatement) - Paper 2 Flashcards
What is economic loss?
Loss of money due to D’s negligence
What are the two types of economic loss?
Pure and Consequential
What is pure economic loss?
Financial loss which is not consequent on any physical injury or damage to C and you cannot claim for this in Tort law
What is consequential economic loss?
Loss in money which is a direct consequence of physical damage caused by negligent acts and this loss is recoverable
Which case established the law for economic loss?
Spartan Steel v Martin
What is the meaning of negligent misstatement?
D makes a statement, C relies on that statement and loses money as a result
Which case established the four conditions for negligent misstatement
Hedley Byrne v Heller
What is the first stage of negligent misstatement?
D must possess special skill relating to the advice given, based on the skill and judgement of D and the reliance placed upon it
What is the general rule about statements made informally or in a social situation?
D will not be liable
Which case held that advice given in a social situation may rise to a duty of care provided they possess relevant expertise?
Chaudhry v Prahaker
What is the second stage of negligent misstatement?
D must know that it is highly likely C will rely on that advice
What was the ruling in Mutual Life v Evatt?
A duty arises when D was in the business of giving that type of advice, or had professed to have special skill or knowledge in the field in which the advice was given
What is the third stage of negligent misstatement?
C must rely on the advice and suffer a financial loss
What is the final stage of negligent misstatement?
It must be reasonable for C to rely on the advice
What is the ruling from White v Jones?
If D is in a position of authority or responsibility, then it is more reasonable to rely on their advice
