Pure Economic Loss

Question 1

Pure economic loss

Answer 1

This is economic loss which is UNCONNECTED to physical damage to claimant’s person/property. Consequential economic loss (not pure economic loss) = lost money caused/followed on by the physical damage/injury. Defendant owes a duty not to cause the consequential economic loss.

Question 2

Pure economic loss - general rule

Answer 2

A defendant does not owe a duty of care to claimant who suffers pure economic loss. Where a claimant suffers from this loss it is not recoverable

Question 3

Defective item

Answer 3

Classed as pure economic loss as it’s just a loss of investment - there is no personal/physical injury/damage. Loss is not recoverable

Question 4

Economic loss caused by damage to the property of a third party

Answer 4

Where there is some physical damage but it is not suffered by the claimant it is classed as pure economic loss. If you negligently damage property belonging to a third party and cause me loss there is not a sufficiently close relationship between us. You do not owe me a duty of care so no loss is recoverable.

Question 5

Economic loss where there is no physical damage - negligent statements

Answer 5

General rule remains - no duty of care owed

Question 6

Negligent statements - Exception - Special relationship

Answer 6

Duty of care arises in a case of negligent statements causing pure economic loss when there is a special relationship between the persons giving and receiving the advice

Question 7

Requirements for exception (Special relationship)

Answer 7

• Did the defendant assume a responsibility towards the claimant? (Use caparo to establish it):
• Did the adviser know the purpose for which the advice was required?
• Was the advice relied on?
• Was it reasonable for the claimant to rely on the defendant for advice?

Question 8

Defences - Exclusion of liability

Answer 8

2 requirements a defendant needs to satisfy before they will be able to rely on an exclusion clause:
1) Reasonable steps must have been taken to bring the exclusion notice to the claimant’s attention before the tort was committed.
2) The wording of the notice must cover the loss suffered by the claimant
It is not possible to exclude liability for death or personal injury. It is possible for the defendant to disclaim liability for negligent acts causing other damage provided the disclaimer is reasonable under UCTA or fair under CRA