Tort of Negligence: Liability for Pure Economic Loss

Question 1

What does the case SPARTAN STEEL V MARTIN & say about pure economic loss?

Answer 1

There is no liability in tort for a pure economic loss caused by D’s negligent act

Question 2

What happened in SPARTAN STEEL V MARTIN & CO?

Answer 2

D cut wires which caused a smelting company to lose electricity but C could only claim damages for the metal on the production line at the time and profit that would’ve been made on that metal

Question 3

What does the case HEDLEY BYRNE V HELLER & PARTNERS say about pure economic loss?

Answer 3

A claim may be made in tort by those who suffer pure economic loss as a result of relying on D’s negligent advice or information, provided there was a special relationship between C and D

Question 4

Which case defined what a special relationship was?

Answer 4

CAPARO

Question 5

What are the five elements which amount to a special relationship?

Answer 5

• D must possess some special skill or expertise relating to the advice which is greater than D’s
• D must give the advice for a known purpose
• D must communicate the advice to C
• C must rely on the advice
• D knows that C will rely on the advice

Question 6

What does the case CHAUDHRY V PRABHAKAR say about a special relationship?

Answer 6

It is possible for a special relationship to exist in certain social situations

Question 7

What case defines the breach of duty of care for pure economic loss?

Answer 7

BLYTH V BIRMINGHAM WATERWORKS

Question 8

What does the case BLYTH V BIRMINGHAM WATERWORKS say about the breach of duty for pure economic loss?

Answer 8

D will have breached the duty of care if when giving advice he failed to reach the standard of care required of the reasonable person in the circumstances

Question 9

What must D’s breach of duty caused?

Answer 9

Pure economic loss suffered by C