Pure Economic Loss Flashcards
Definition of Pure Ecomonic Loss (PEL)
Financial loss that does not flow from physical injury or property damage
PEL:
General rule that no duty of care is owed in tort in respect of PEL
Murphy v Brentwood
PEL:
Spartan Steel v Martin & Co
Recovered consequential economic loss that stemmed from the property damage but not pure economic loss
PEL:
Exception to general rule on duty of care
In cases of negligent misstatement, a duty of care is owed if there is a special relationship between the parties
PEL:
In cases of negligent misstatement, a duty of care is owed if there is a special relationship between the parties
Hedley Byrne
PEL:
Two elements must be present for special relationship to exist
An assumption of responsibility to the claimant by the defendant
Reasonable reliance on the defendant’s statement by the claimant
PEL:
Caparo Industries - 4 criteria for ‘assumption of responsibility’
- Adviser knew of purpose for which advice was required
- Adviser knew advice would be communicated to advisee
- Adviser knew the advisee was likely to act on advice without further inquiry; and
- Advisee acted on advice to his detriment
(Constructive knowledge will suffice)
PEL:
White v Jones
Extends Hedley Byrne principle to negligent provision of professional services, providing there is no assumption of responsibility and clearly foreseeable damage
PEL:
Spring v Guardian Assurance
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
PEL:
Desmond
Duty to act in public interest overrides duty of care owed to claimant
Statute prevails over common law
PEL:
Limitations to Hedley Byrne principle
Duty will not be owed in social situation
Insufficient proximity of relationship defeats a negligent misstatement PEL claim
PEL:
Chaudhry v Prabhakar
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:
- It was clear that C would be relying on advice; and
- D has more experience/knowledge
PEL:
Hicks Anderson
Insufficient proximity of relationship defeats a negligent misstatement PEL claim
PEL:
Defences available to defendant
Usual Negligence defences AND exclusion of liability
PEL:
To rely on disclaimer/exclusion notice as a defence
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)
PEL:
s.2(1) UCTA
D cannot exclude liability for death or personal injury
PEL:
s.2(2) UCTA
In order to exclude liability for loss or damage other than death or PI, clause must be reasonable
PEL:
s.11(3) UCTA
Defines reasonableness:
Must be fair and reasonable to allow reliance on the clause, having regard to all circumstances
PEL:
Smith v Eric S Bush (factors to take into account for reasonableness of exclusion clause/disclaimer)
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?
PEL:
s.61 CRA 2015
CRA applies where D is acting as a trader and the claimant is a consumer
PEL:
s.62 CRA
In order to exclude liability for loss/damage other than death or PI, clause must be fair
PEL:
s.62(4) CRA
Defines when a term is unfair
PEL:
s.62(5) CRA
Elements to consider for determining whether a term is fair
PEL:
s.65 CRA
Cannot exclude or restrict liability for death or personal injury resulting from Negligence
