Negligence- economic loss and psychiatric injury

Question 1

Theory of tort law- economic loss

Answer 1

While a duty is owed to claimants not to damage property, there is no duty to compensate for loss of profit.
There are two main reasons for this:
1. Financial or economic loss would traditionally be compensated for law of contract
2. Allowing the claims could lead to the ‘floodgates’ being opened to similar claims

• More difficult to show

Question 2

Economic loss caused by negligence

Answer 2

If a claimant successfully proves a negligent act or omission by another they will be able to claim for
- any physical damage
- any damage to property
The claimant cannot claim for pure economic loss

Question 3

Loss caused by negligent acts- Spartan Steel v Martin and Co Ltd (1973)

Answer 3

The defendants were responsible for digging up a road outside the plaintiff’s smelting factory. As a result of their negligence when carrying out this task, they inadvertently severed a power supply under the road resulting in a loss of power to the plaintiff’s factory. The plaintiffs suffered a number of forms of damage as a result of this, including loss of profits as a consequence of the factory being non-operational for the period while it was without power, and physical damage to the metal which was in the process of being smelted at the time the power was lost.

Issues
The question was whether the plaintiff could recover damages for the loss of profits or whether this was irrecoverable in negligence as it was a ‘pure economic loss’.

loss of profit was decided to be a contract law issue not a tort one.