Pure Economic Loss/Negligent Misstatement

Question 1

Define pure economic loss

Answer 1

Financial damage suffered as the result of the negligent act of another party which is not accompanied by any physical damage to a person or property.
(Weller v Foot and Mouth Disease)

Question 2

How was pure economic loss clarified

Answer 2

(Spartan Steel v Martin) - negligently damaged factory electric cable - loss of profits

Question 3

Negligent misstatement

Answer 3

Economic loss can be recovered for a negligent misstatement under the rules laid down in
(Headly Byrne v Heller)
C must prove there was a special relationship.

Question 4

(1/5) Special relationship

Answer 4

(Chaudry v Prabhakar)
It must be shown that D possesses a skill of expertise - can extend to a social setting if D holds himself to have a particular skill.

Question 5

(2/5) Assumed responsibility

Answer 5

Must be shown that D assumed responsibility for giving the advice. Formal contract between parties - sometimes there are disclaimers in the contract to absolve the other party from liability.

Question 6

(3/5) Known user

Answer 6

(Goodwill v British Pregnancy Council)
D knows the identity of that particular person who is relying on the statement

Question 7

(4/5) Known purpose

Answer 7

(Caparo v Dickman)
The information must have been prepared for a known purpose - knows the purpose of the statement

Question 8

(5/5) Reasonable reliance

Answer 8

(Smith v Eric Bush)
Must be shown that there was reliance on the advice and it was reasonable to do so.