Negligence: Pure Economic Loss

Question 1

General Rule for recovering pure economic loss

Answer 1

Not recoverable in an action for negligence

Question 2

3 examples of pure economic loss caused by negligent acts

Answer 2

Claimant suffers loss because of damage to someone else’s property

Cost of damage to defective product acquired by claimant
- NOTE: C can recover to their own property that gets damaged by the defective product

Financial loss that does not flow from the damage to the claimant.

Question 2

What is the Special Relationship Exception

Answer 2

When pure economic loss is caused by a negligent misstatement, there is generally no remedy in tort unless a special relationship exists between the parties.

Elements:
(1) Advice is required for a purpose known to D
(2) D knows that C will hear this advice and is likely to act on it without further inquiry
(3) C actually did rely on the advice
(4) It was reasonable for C to rely on the advice

NOTE: Can still recover in this situation via a BoC action.