Pure economic loss Flashcards
What is the definition of pure economic loss?
1) economic loss not flowing from damage to person or property
2) loss arising from damage to property of another
3) defective items
What is the general rule?
No duty of care is owed in respect of pure economic loss.
However there are exceptions
These relate to negligent statements, not negligent acts
What are the three exceptions?
1) Wills- where the ill is negligently drafted leading to a loss of inheritance
2) references- work references- duty of care owed to the subject to provide an accurate reference
3) pure economic loss caused by negligent misstatement
What is the structure for a negligent misstatement claims?
1) Identify the parties
2) identify the loss
3) duty of care
4) reasonable reliance test:
1) the claimant relied on the defendants advice
2) reasonable for the claimant to rely on the defendant’s advice
3) the defendant knew/ought to know the claimant was relying on the advice
5) has there been a voluntary assumption of responsibility?
6) is there a special relationship of trust and confidence between the parties?
What happens if the negligent misstatement is said to a third party but makes its way back to the claimant
Rules in Hedley Byrne apply
but also:
1.The defendant must communicate the advice to the third-party claimant (as an identifiable individual or as a member of an identifiable class) or know that it will be communicated to him or her;
2.The defendant must know the purpose (whether specifically or generally described) for which the claimant will use this advice;
3.The defendant must know, or reasonably believe, that the claimant will rely on this advice without independent enquiry; and
4.The claimant has acted upon that advice to his detriment, such that it must be reasonable to expect the defendant to protect the claimant from that loss.
