Tort - Negligence: Pure Economic Loss

• What is the general rule for CL who suffers pure economic loss?

  D owes no duty of care to CL, so any pure economic loss is not recoverable.
• Can damages be recovered for economic loss caused by defective items?

  No bc damage = Pure economic loss for which duty of care is never owed
• Can damages be recovered for economic loss caused by damage to property of third party?

  No sufficient close relationship b/w CL and D so D does X owe CL duty if care and CL X recover loss from D = Pure economic loss
• Can damages/loss be recovered If D negligently damages CL's property causing CL loss?

  Yes, bc sufficiently close relationship b/w both so D owes CL duty of care and CL can recover loss.
• Is duty of care owed for economic loss caused by negligent actions where there is no physical damage?

  No
• Is duty of care owed for economic loss caused by negligent statements where there is no physical damage?


  Generally, no, exception: Where court finds close relationship b/w CL and D where D assumed responsibility towards CL.
• When would courts assume a special relationship?

  2 elements to special relationship: (a) assumption of responsibility by D; (b) reasonable reliance by CL.
• What criteria did Caparo state to satisfy D having assumed a responsibility towards CL?

  1. D knew purpose for which advice was required;
  2. D knew advice would be communicated to CL (either specifically or as member of ascertainable class;
  3. D knew CL was likely to act on advice wo independent inquiry;
  4. Advice was acted on by CL to its detriment
• Is duty of care owed in respect of advice given in a social situation?

  Generally, no
• Is economic loss recoverable where no physical damage but negligent statements are made to third party instead of CL?

  Where 3rd party rely on statement made by D to detriment of CL, eg former employer's provide negligent reference causing CL to not get employed by prospective new employers, suffering pure economic loss= duty of care owed. OR eg where solicitors undertake responsibility towards potential B's of a new will they were supposed to draft but didn't and testator's old will takes effect upon death. So, negligent provision of professional services = assumption of responsibility.
• Defences for where all elements of claims in negligence (duty of care, breach of duty and causation of damage) are satisfied - Exclusion of liability


  D must satisfy these b4 relying on exclusion notice: Reasonable steps taken to bring exclusion notice to CL's attention b4 tort committed; Wording of notice must cover loss suffered by CL. Unfair Contract Terms Act 1997 and Consumer Rights Act 2015 can restrict ability of D using this defence
• Unfair Contract Terms Act 1997 (UCTA 97)

  Applies to negligence claims. s2 relevant to D's ability to excl liability for negligent acts/omssions, but X apply to 'consumer contracts' or 'consumer notices'. 2 be applicable: D must be acting in course of business. D X excl liability 4 death or PI bc of negligence. Other damages/loss can be excl if reasonable to allow reliance on excl notice, in regard to all circumstances.
• Consumer Rights Act 2015 (CRA 2015)


  2 apply: D must be trader (purpose relates to person's trade, business, craft, profession) and CL must be consumer (purposes are wholly/mainly outside individual's trade, business, craft, profession). X excl liability for death or PI bc of negligence. Other damages/loss can be excl if fair to allow reliance on notice, in regards to all circumstances. 'Fair'=requires good faith.
• Factors to consider when deciding 'reasonableness'

  • Were parties of equal bargaining power?
  • In advice cases, is it reasonably practicable to obtain advice from alternative source taking into account cost and time?
  • How difficult is task being undertaken for which liability is being excl?
  • What are practical consequences, considering sums of money at stake and abilities of parties to bear loss, particularly in light of insurance?