Pure Economic Loss Flashcards
What are the four main types of loss in a negligence claim?
Personal injury / property damage
Consequential economic loss
Pure economic loss
Psychiatric damage
What is the general rule about whether types of loss are recoverable?
Personal injury / property damage and CEL, but not PEL.
When does pure economic loss occur?
Where there has been no damage to the claimant’s property or injury to their person.
In what three situations can pure economic loss occur?
Economic loss not flowing from damage to person or property e.g. bad investment, lost opportunity.
Loss arising from damage to the property of another
Defective items
What is the general rule for pure economic loss?
No duty of care is owed in respect of pure economic loss.
In Spartan Steel, what three types of loss were there and which of them were recoverable?
Damaged metal - property damage - recoverable
Loss of profit on damaged mental - consequential economic loss as a result of damage - recoverable
Loss of profit on four further melts which could have been sold; pure economic loss as this did not result from any damage to the claimant’s property or person. [Spartan Steel did not own the electricity cable] - no duty of care and therefore not recoverable.
What are the three exceptions to the rule on pure economic loss?
PEL caused by negligent statements
Wills
References
What is the test from Hedley Byrne where a duty of care might be owed from a negligent misstatement?
Reasonable reliance
Assumption of responsibility
Special relationship of trust and confidence between the parties.
[Not all three tests have to be satisfied; one of three can be found]
What are the elements of reasonable reliance?
Claimant relied on the defendant’s advice
It was reasonable for the claimant to rely on the defendant’s advice
The defendant knew or ought to have known that the claimant was relying on their advice
What factors are relevant to consider when judging whether the defendant knew / ought to have known that the claimant was relying on their advice?
Special skill or knowledge of the defendant
”” of the claimant
General context in which advice is given - generally no duty if the advice is given in a social situation.
Other relevant general factors.
- Nature of advice
- Potential risk to the claimant
- Availability and practicality of a second opinion.
What four criteria must have been established to find whether a defendant has ‘assumed responsibility’ towards a claimant [Hedley test 2]
Defendant must communicate the advice to the claimant [as an identifiable member of an identifiable class]
Defendant must know for what purpose the claimant will use this advice.
Defendant must know, or reasonably believe, that the claimant will rely on this advice without independent inquiry.
Claimant must have acted upon that advice to their detriment.
What are disclaimers dependent upon?
Must be reasonable - in accordance with UCTA and the CRA
What factors will UCTA consider?
Were the parties of equal bargaining power?
Would it have been reasonably practicable to obtain advice from an alternative source
How difficult was the task being undertaken by the defendant?
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 - in light of insurance?
