Pure economic loss

Question 1

what are the types of loss in negligence?

Answer 1

1. personal injury/property damage.
2. consequential economic loss (loss of salary eg)
3. Pure economic loss.
4. Psychiatric damage.

as a general rule the first two are recoverable.

Question 2

what is pure economic loss?

Answer 2

where there has been no damage to the claimant’s property or injury to their person.
e.g bad investment, missed a contractual opportunity.

2. loss arising from damage to the property of another.
3. defective items- CANNOT RECOVER the cost of replacing a defective item.

NO DUTY OF CARE FOR PURE ECONOMIC LOSS.

Question 3

what are the exceptions to the rule that no duty of care is owed in respect of pure economic loss?

Answer 3

1. pure economic loss caused by negligent statements- by a negligent misstatement.
2. wills- where the beneficiary suffers a loss due to solicitors negligence.
3. references- duty of care owed to the subject of the reference to provide an accurate reference.

Question 4

what is the test in Hedley Burne v Heller about negligent misstatements and pure economic loss

Answer 4

1. claimant relied on the D’s advice- question of fact.
2. reasonable for the claimant to rely on D’s advice.
3. D knew or ought to have known that the C was relying on their advice- question of fact.

NOT ALL 3 TEST MUST BE SATISFIED.

THEN
Has there been a voluntary assumption of responsibility?
Is there a special relationship of trust and confidence between the parties?

Question 5

how to work out whether a disclaimer is reasonable?

Answer 5

1. were the parties of equal bargaining power?
2. would it have been reasonably practicable to obtain advice from alternative source considering cost and time.
3. how difficult was the task being undertaken by the D?
4. what are the practical consequences taking into account the sums of money at stake and the ability of the parties to bear the loss involved?