Pure Economic Loss

Question 1

Definition of Pure Ecomonic Loss (PEL)

Answer 1

Financial loss that does not flow from physical injury or property damage

Question 2

PEL:

General rule that no duty of care is owed in tort in respect of PEL

Answer 2

Murphy v Brentwood

Question 3

PEL:

Spartan Steel v Martin & Co

Answer 3

Recovered consequential economic loss that stemmed from the property damage but not pure economic loss

Question 4

PEL:

Exception to general rule on duty of care

Answer 4

In cases of negligent misstatement, a duty of care is owed if there is a special relationship between the parties

Question 5

PEL:

In cases of negligent misstatement, a duty of care is owed if there is a special relationship between the parties

Answer 5

Hedley Byrne

Question 6

PEL:

Two elements must be present for special relationship to exist

Answer 6

An assumption of responsibility to the claimant by the defendant
Reasonable reliance on the defendant’s statement by the claimant

Question 7

PEL:

Caparo Industries - 4 criteria for ‘assumption of responsibility’

Answer 7

1. Adviser knew of purpose for which advice was required
2. Adviser knew advice would be communicated to advisee
3. Adviser knew the advisee was likely to act on advice without further inquiry; and
4. Advisee acted on advice to his detriment
   (Constructive knowledge will suffice)

Question 8

PEL:

White v Jones

Answer 8

Extends Hedley Byrne principle to negligent provision of professional services, providing there is no assumption of responsibility and clearly foreseeable damage

Question 9

PEL:

Spring v Guardian Assurance

Answer 9

Extends Hedley Byrne principle to cases where negligent misstatement is made to a third party, provided third party relies on it to detriment of claimant

Question 10

PEL:

Desmond

Answer 10

Duty to act in public interest overrides duty of care owed to claimant
Statute prevails over common law

Question 11

PEL:

Limitations to Hedley Byrne principle

Answer 11

Duty will not be owed in social situation

Insufficient proximity of relationship defeats a negligent misstatement PEL claim

Question 12

PEL:

Chaudhry v Prabhakar

Answer 12

Duty WILL be owed in social situation where D’s advice has gone beyond social advice and he has assumed responsibility. Will be the case where:

1. It was clear that C would be relying on advice; and
2. D has more experience/knowledge

Question 13

PEL:

Hicks Anderson

Answer 13

Insufficient proximity of relationship defeats a negligent misstatement PEL claim

Question 14

PEL:

Defences available to defendant

Answer 14

Usual Negligence defences AND exclusion of liability

Question 15

PEL:

To rely on disclaimer/exclusion notice as a defence

Answer 15

D must have taken reasonable steps to bring it to C’s attention before tort committed (incorporation)
Wording of the clause must cover the loss (Construction)

Question 16

PEL:

s.2(1) UCTA

Answer 16

D cannot exclude liability for death or personal injury

Question 17

PEL:

s.2(2) UCTA

Answer 17

In order to exclude liability for loss or damage other than death or PI, clause must be reasonable

Question 18

PEL:

s.11(3) UCTA

Answer 18

Defines reasonableness:

Must be fair and reasonable to allow reliance on the clause, having regard to all circumstances

Question 19

PEL:

Smith v Eric S Bush (factors to take into account for reasonableness of exclusion clause/disclaimer)

Answer 19

Are parties of equal bargaining power?
In cases of advice, would it have been reasonably practicable to obtain advice from an alternative source?
How difficult is the task for which liability is excluded?
Practical consequences - are parties able to bear loss?

Question 20

PEL:

s.61 CRA 2015

Answer 20

CRA applies where D is acting as a trader and the claimant is a consumer

Question 21

PEL:

s.62 CRA

Answer 21

In order to exclude liability for loss/damage other than death or PI, clause must be fair

Question 22

PEL:

s.62(4) CRA

Answer 22

Defines when a term is unfair

Question 23

PEL:

s.62(5) CRA

Answer 23

Elements to consider for determining whether a term is fair

Question 24

PEL:

s.65 CRA

Answer 24

Cannot exclude or restrict liability for death or personal injury resulting from Negligence