Pure economic loss

Question 1

Liability for economic loss in negligence

Answer 1

Generally no duty of care owed to avoid causing another to suffer a loss which is purely economic, where the financial loss is not related to a personal injury or damage to property - Spartan Steel and alloys Ltd v Martin

Question 2

Exception for pure economic loss

Answer 2

Where the economic loss is caused by a negligent misstatement (which includes advice) rather than a negligent act, liability may be imposed - Hedley Byrne and co Ltd v Heller and partners Ltd

Question 3

Hedley Bryne

Answer 3

A negligent misstatement may give rise to an action for damages for economic loss.
D owes duty of care in making of statement only if there is a ‘special relationship’

Question 4

What does a special relationship mean

Answer 4

• D who made statement possesses some special skill relating to the statement
• Knows its highly likely the claimant will rely upon it
• The claimant does rely on it thereby incurring financial loss
• Reasonable for claimant to so rely upon it

Question 5

Spartan Steel and alloys Ltd v Martin

Answer 5

Recovery of damages for pure economic loss was not permitted as ‘a matter of policy so as to limit the liability of the D’ - Lord Denning