Pure Economic Loss and Negligent Statements

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These flashcards cover key terms and concepts related to the lecture on pure economic loss and negligent statements in tort law.

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15 Terms

1
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Pure Economic Loss

Financial losses that are not consequential upon physical injury or property damage.

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Negligent Misstatement

A false statement made carelessly that can cause economic loss, for which a duty of care may be established.

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Hedley Byrne v Heller (1964)

A landmark case establishing that a duty of care can arise from negligent misstatements.

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Duty of Care

A legal obligation requiring one to adhere to a standard of reasonable care while performing any acts that could foreseeably harm others.

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Proximity

The closeness of the relationship needed to establish a duty of care in negligence law.

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Caparo Test

A three-part test to establish a duty of care: foreseeability, proximity, and whether it is fair, just, and reasonable to impose a duty.

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Assumption of Responsibility

The idea that a duty of care may arise when one party voluntarily assumes a responsibility for another’s economic interests.

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Economic Loss Cases

Legal cases that involve claims for pure economic loss due to negligent acts or statements.

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Spartan Steel & Alloys v Martin & Co

Plaintiff incurred losses due to a 14-hour power cut caused by the defendant's negligent actions. The plaintiff's losses included:

  1. Reduced value of metal removed from a furnace.

  2. Profit from the incomplete ‘melt’.

  3. Projected profits from future ‘melts’.

The Court of Appeal awarded compensation for the first two losses only, as the loss of future profits was deemed pure economic loss, not arising from physical damage.

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Murphy v Brentwood DC (1991)

A case where the House of Lords ruled that pure economic loss resulting from property defects is generally not recoverable in England. Overruled the case of Anns v London Borough of Merton. Cracked foundations regarded as pure economic loss and not recoverable.

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Smith v Bush (1990)

A case where the court held that a surveyor owed a duty of care to the house purchaser, not just the bank.

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Special Relationship

A legal concept determining the circumstances under which a duty of care arises due to proximity and reliance.

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Consequential Economic Loss

Financial loss that occurs as a direct consequence of physical injury or damage.

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Policy Considerations

Views considered by the courts when determining whether to impose a duty of care, often emphasizing economic versus physical interests.

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Negligent Acts vs. Negligent Statements

A distinction in tort law where economic loss is recoverable from negligent statements but not from negligent actions that do not cause physical damage.