Pure Economic Loss

Question 1

What are the two types of economic loss

Answer 1

Pure and consequential (Spartan steel and alloys ltd v martin)

Question 2

How do we know if something is pure economic loss

Answer 2

Because it is not arising from a personal injury or damage to property

Question 3

How does duty of care apply to pure economic loss

Answer 3

Pure economic loss is not recoverable unless there was a duty of care, and yo establish the duty of care the courts will ask; if c’s loss was caused by d’s negligent misstatement, and there was a special relationship between c and d (hedley Byrne v heller)

Question 4

What is a negligent mistatement

Answer 4

A statement which can be written or verbal and in any form which conveys information to another party

Question 5

What are the five requirements set out to prove there was a special relationship between c and d

Answer 5

D must posses a special skill (mutual life v evatt/chaudry v prabhaker)
C must reply on the statement to his detriment (yianni v Edwin Evan’s)
The reliance must be reasonable (James McNaughton paper group v hicks)
The advice must be required for a purpose made known to the advisor (caparo v dickman)
(If relevant)if the advice will be passed on to a person ultimaly relying on it, this must be known to d at the time advice was given (caparo v dickman)

Question 6

What are the three relevant risk factors in the BOLAM test

Answer 6

Degree of risk (Bolton v stone)
The magnitude of harm (Paris v stephney)
Practicality of taking precautions (Latimer v AEC)