Tort Law - Negligence - Pure Economic Loss

Question 1

What is pure economic loss?

Answer 1

A purely economic is an economic or financial loss which is not caused by personal injury or property damage e.g. loss of profits whilst a business cannot operate

Question 2

What generally happens with pure economic loss?

Answer 2

Generally a claimant cannot typically claim for pure economic losses. This statement is true where the pure economic results from the negligent act of another, there is no duty of care in relation to economic loss from negligent acts

Question 3

Generally a claimant cannot typically make a claim for pure economic loss: which case reflects this principle?

Answer 3

Spartan Steel v Martin. Held: they were successful in their claim with regard to the physical damage of items but not for the loss of profits whilst the factory was closed. This was a purely economic loss and there is no duty of care in relation to pure economic loss resulting from negligent acts.

Question 4

What is the only circumstance that the law will establish liability in pure economic loss?

Answer 4

Where there has been a negligent misstatement made by the defendant in the course of a special relationship which has caused the pure economic loss. These two criteria act as limits upon establishing liability within this area of law.

Question 5

Which is the first case where the court recognised that there could have been liability in a situation where the loss was purely economic?

Answer 5

Hedley Byrne v Heller and Partners

Question 6

Which case clarified the three aspects of a special relationship that need to be proved in order to establish liability for a negligent misstatement? What are the three aspects?

Answer 6

Caparo v Dickman

1. The person giving the advice possesses or purports to possess a special skill or certain expertise
2. The person giving the advice knows that it is being required for a purpose described at the time to the defendant and will be acted upon
3. The claimant does reasonably rely upon the statement

Question 7

What case shows that negligent misstatements can be made in the course of social relationships and social situations?

Answer 7

Chaudhry v Prabhakar