Remedies for negligence would remove significance of statutory claims- the courts should regard the statute as an inspiring example of what they should be doing. The claimant must not just show reliance, they must also prove it was reasonable to rely on such a statement. PURE ECONOMIC LOSS The common law has reluctance in permitting recovery in tort for reasonably foreseeable PURE economic loss caused by negligence i.e. That there was a relationship of proximity, That it is fair, just and reasonable to impose a duty of care. It was better attitude to take for people would be they would simply work harder the next day rather than running to lawyers for compensation. This is the kind of test lord Hoffman were thinking about, to keep the AoR coherent you mustn’t force factual relationships into it.- Caparo provides residual backup to not stretch aor test. In many cases, the losses incurred are purely economic where there are, for instance, no personal injuries or property damage resulting from someone else’s negligence. This is the so-called Hedley Byrne principle following the case ofHedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465. Pure economic loss occurs when the plaintiff suffers a financial loss in the absence of any physical or property damage due to the negligence of the defendant. Floodgate argument: risk of the courts being confronted with multitude of claims which are difficult to determine/calculate. The loss is purely financial. Most losses that result from the tort of negligence are financial losses – also known as economic loss. If an electrical contractor negligently cuts through electric cables in the factory, resulting in the factory being ‘unusable’ for the purpose for which it is required, then a claim of pure economic loss would be for the potential earnings the company could have gained had the electric cable not been damaged, and the factory was still usable. do not have a uniform legal definition: financial loss, pecuniary loss, economic loss, pure economic loss etc – the law about the recovery of such losses, in contract or in tort, can be tricky and confusing, as the examples in the report show. Pure economic loss should be distinguished from consequentialeconomic loss. A typical example will be where there is a commercial relationship between the parties and the advice was given in a business context. Firstly, when talking about negligentstatements- the only person allowed to rely on this is the person to whom itwas intended for. The House of Lords furthered this by saying a person can make a claim for pure economic loss as a result of negligent misstatements – providing there is a special relationship between the parties involved. We try our very best to keep everything on this site accurate and up-to-date, but the law changes quite a bit and we've got over 1,300 pages to keep an eye on. Special skill AND knowledge= assume responsibility. The allowance of concurrent actions was immensely controversial, as it ran contrary to legal orthodoxy. Also made it clear there isn’t a third separate test called the analogy test. Australia went even further and said here duty of care owed in relation to any damage. Case is sceptical of Hedley Byrne- the question shouldn’t really be about whether responsibility has been assumed but it ought to be as a matter of principle/policy that responsibility was/should’ve been imposed. Which of the following is not an example of pure economic loss? 13 of Volume 78 (Negligence) which stated that ^where a defendant negligently damages property belonging to a third party, a claimant who suffers economic loss through dependence on that property, or a … E.g. Loss of market value of a property owing to the inadequate specifications of foundations by an architect. Consider a manufacturing company. Attempts to solve this problem in the run up to the case, Merritt- it’s not about where there’s an assumption of responsibility or whether we should see if we deem that assumption of responsibility has been assumed. "Pure economic loss" has been defined as "a diminution of worth incurred without any physical injury to any asset of the plaintiff." E accepted that the cost of replacing the system was a direct loss, but that all the other losses were indirect and therefore excluded from the contract. Not physical damage Not consequential, economic loss: o economic harm which is a direct result of actual physical damage e.g. Floodgate arguments- Canadian Supreme Court said it was socially desirable to encourage people to remedy defects that are likely to incur. Generally no duty of care is owed to avoid causing another to suffer a loss which is purely economic. Question more about the social policy questions outlined by Denning. 2 This reflected the law summarised e.g. Common categories of pure economic loss are expenditure, loss of profit, profitability or loss of some other form of financial gain. Voluntariness is what you’re looking for. The claimants suffered three harms: Damage to the furnaces and steel in use at the time; economic loss of the profit of selling the steel; and economic loss due to the halting of its manufacturing. 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