Negligence - liability for pure economic loss

Question 1

what is economic loss

Answer 1

not caused by physical injury or damage. e.g. loss of profit by a business when it is unable to operate

Question 2

steps of PEL

Answer 2

1 - PEL caused by negligent acts
2- negligent misstatements - duty of care
3 - negligent misstatements - breach
4 - negligent misstatements - causation and damages

Question 3

1st step and cases

Answer 3

PEL CAUSED BY NEGLIGENT ACTS

case
general rule - SPATAN STEEL V MARTIN AND CO. (CONTRACTORS)
if PEL is not caused by physical injury or damage to c, then it can not be claimed.
no liability - d does not have to pay
SPARTAN STEEL V MARTIN AND CO. (CONTRACTORS) LTD

Question 4

2nd step and case

Answer 4

Negligent misstatements - duty of care

case
HEADLY BRYNE V HELLER AND PARTNERS
can be claimed if there is a ‘special relationship’ between D and C

CAPARO V DICKMAN
called special relationship a ‘relationship of proximity’ - requirements
1- possession of a special skill or expertise of D
e.g. recognised qualifications or special skills or knowledge in relation to advice given

2- D knows it is highly likely his advice will be relied upon
d knows/should reasonably foresee the advice will be acted upon by c without taking any further independent advice

3- reliance by c on the advice which leads to economic loss
4- It is reasonably for c to rely on the advice
- social situations - not normally reasonably to rely but - CHAUDBURY V PRABHAKER - special relationship can exist if advice given in social situation or in course of social relationship

• HEADLY BRYNE V HELLER AND PARTNERS - if maker of statement voluntarily assumes responsibility of making statement rather than staying silent, this supports duty of care

5- advice is communicated directly to c
not through 3rd party or 3rd party means, radio or tv

6- there is no disclaimer
a statement from d to c that he does not accept responsibility for the advice given - disclaimer would act as a defence

Question 5

3rd step and definition

Answer 5

negligent misstatement - breach

did d display the care, skill and expertise that would normally be displayed by a reasonably competent advisor?

Question 6

4th step and cases

Answer 6

negligent misstatement - causation and damages
check causations
- but for - BARNETT V CHELSEA KENSINGTON HOSPITAL MANAGEMENT
- remoteness of damage - WAGON MOUND
remedies
- damages
same of normal negligence - compensatory