Chapter 4: Negligence: Pure Economic Loss

Flashcards covering key principles, case law, exceptions, and statutory controls related to pure economic loss and negligent misstatement in tort law.

What is the general rule regarding liability for pure economic loss, and what reasons justify it?

The general rule is that there is no duty not to cause pure economic loss, justified by a lack of proximity and the risk of boundless liability.

What is consequential economic loss and under what conditions is it recoverable?

Consequential economic loss follows physical injury or property damage to the claimant and is recoverable with no special rules (e.g., lost wages, repair and storage costs).

Why is the cost of a defective item of property non-recoverable under Murphy v Brentwood?

The claimant has only acquired something worth less, making the remedy lie in contract; while personal injury or damage to other property is recoverable, the cost of the defective item itself is not.

According to Spartan Steel, how are losses resulting from damage to a third party's property treated?

Loss on property the claimant owned is recoverable, but future loss of profit resulting from the power cut is not.

Which case illustrates that pure economic loss caused by actions without physical damage is not recoverable?

Weller.

Under Hedley Byrne, what establishes a duty of care for negligent misstatement?

A special relationship where a duty arises from an assumption of responsibility plus reasonable reliance.

What are the four Caparo criteria required to establish a duty for negligent misstatement?

1. The defendant knew the purpose of the advice; 2. Knew it would be communicated to the claimant (or an ascertainable class); 3. Knew the claimant would act without independent inquiry; 4. The claimant acted on it to their detriment.

When can social advice create a duty of care according to Chaudhry v Prabhakar?

When advice is given in a social context by a friend who possesses expert knowledge.

What extension of liability based on assumption of responsibility was established in Spring?

Liability for providing a negligent reference to a third party.

What extension of liability based on assumption of responsibility was established in White v Jones?

Liability for a negligent service that results in a beneficiary losing out.

What rule regarding concurrent claims was established in Henderson?

Concurrent contract and tort claims are allowed if the duties are consistent.

What two conditions must exclusion notices satisfy to be legally effective?

Reasonable steps must be taken to bring them to the claimant’s attention, and their wording must cover the loss.

Which statutes control exclusion notices in business contexts versus trader-to-consumer contexts?

UCTA 1977 controls business contexts, and CRA 2015 controls trader-to-consumer contexts.

Can liability for death or personal injury be excluded under UCTA 1977 and CRA 2015?

No, liability for death or personal injury cannot be excluded.

What statutory standards govern the exclusion of loss other than death or personal injury under UCTA and CRA?

Such exclusions must be reasonable under UCTA s 2(2) or fair under CRA s 62.

What factors determine reasonableness under Smith v Eric S Bush?

Bargaining power, alternative sources of advice, difficulty of the task, and consequences and insurance.