Negligence (Economic loss + misstatement)

Consequential economic loss

The C may be able to claim for economic loss.

Consequential economic loss is a loss in money, which is a direct consequence of PHYSICAL damage (not tort) caused by negligent acts. This loss IS recoverable. Spartan Steel v Martin.

Pure economic loss

A loss which is not consequent of physical damage caused by negligent acts. This is NOT recoverable. Spartan Steel v Martin.

Negligent misstatement

The D may be liable for economic loss due to their negligently made statement. Hedley Byrne v Heller set out conditions, which if proved, give rise to a special relationship between the two parties. This was confirmed in Caparo v Dickman.

First stage of negligent misstatement?

D possesses a special skill relating to the advice given- the judgement is made based on the skill and judgement of the D, and the reliance placed upon it.

SR- generally, the D won’t be liable for statements they made informally or in a social situation. However, in Chaudry v Prabhaker it was held that they were still liable.

Second stage of negligent misstatement?

Lord Bridge in Caparo- needs to be proven that the D knew that his statement would be communicated to the C and that the C would be very likely to rely on it.

Third stage of negligent misstatement?

C relies on the advice and suffers financial loss.

Fourth stage of negligent misstatement?

It must be reasonable for C to rely on the advice. Was there sufficient proximity between the parties to make it foreseeable that reliance will occur? (Caparo v Dickman). Also, is the D in a position of authority/responsibility (White v Jones)? If so, reliance is likely to be deemed reasonable.

SR- in Hedley Byrne v Heller, held- if the D could stay silent, yet chooses to make the statement, this supports the existence of a duty of care.