Pure economic loss negligent misstatement
KEY FACTS
a loss which is not derived from physical injury death or propertydamage
generally not recoverable in negligence
may be consequential resulting from the acquisition of a defectiveproduct orpropert
more commonly issue arises due to a negligent misstatement or provision of
professionalservices
economic loss can be dividedby these I due to acquisition of defectiveproduct or prope
2 resulting from a negligentmisstatement
Is an area of commercial and professional importance and has shown a trend
towards expansion in the area of negligent misstatement
TWO KEY CASES Murphy v Brentwood District Council
HedleyByrne vHeller
Assessment
May arise on its own as an essayquestion focused on recentdevelopments or
policy
More lively as a problemquestion to
important to be able to distinguish
answer
pure economic loss from that which is merelythe financial outcome of tangible
physicaldamage or personalinjury
Remember there can always be recoveryfor consequential economic loss without
satisfying the followingprinciples
re
Introduction
often comes in the shape or failure to receive expected future profit or receipt of som
financial benefit or it may result from the acquisition of an item of defective
property or be due to propertydamagesustained by a third party
Along with psychiatric damage one of the two types of damage in which
duty of care is likely to be problematic or absent
I
, I Main reasons for this
1 Pure economic loss has historicallybeen seen as part of contract law tort law
has been mainly concerned with propertydamage personalinjury and death
2 Have been concerns about openingthefloodgates in terms of potentiallywidespread
and limitless losses
Historical background
To understand the scope and extent development of economic loss look at
the contrasting cases
Anns v Merton lateroverruled by MuPhy v Brentwood
initial recognition forpureeconomic loss But broad after completion block of
flats began to develop cracks and unstable froous HELD claimants suffered material
physicaldamage and ordered the council to compensate for repair costs
D's creation of defectiveproperty contract law regarded as damaged propert
for which there is a duty of care innegligence
Murphy v Brentwood DC overruling Anns shows uncertainty s Mataji if no duty
for pureeconomic loss C's house was built on inadequate foundations leading to cracke
walls he lost profit on the sale of the house HELD Anns had been wrongly
decided the loss said to be physicaldamage was pureeconomic loss not recover
buildinghad been fundamentally hawed from the start had never existed in an unflawed
state no physicaldamagedone
Consequential economic loss v pure economic loss
consequential not an issuefor the courts results from personalinjury or physical
damage
Murphy v Brentwood the economic loss is not a result of a physical damage
the
caused property had always existed in that state
Weller v Foot andMouthdisease cattle that got the disease was not owned by C
but they lost money that they would have gotten runningthe auctions theydidn'
own the property that was damaged no consequential loss no compensation
Spartan Steel v Martin power cut majorlyaffected C's metal maningfactory 3
claims
KEY FACTS
a loss which is not derived from physical injury death or propertydamage
generally not recoverable in negligence
may be consequential resulting from the acquisition of a defectiveproduct orpropert
more commonly issue arises due to a negligent misstatement or provision of
professionalservices
economic loss can be dividedby these I due to acquisition of defectiveproduct or prope
2 resulting from a negligentmisstatement
Is an area of commercial and professional importance and has shown a trend
towards expansion in the area of negligent misstatement
TWO KEY CASES Murphy v Brentwood District Council
HedleyByrne vHeller
Assessment
May arise on its own as an essayquestion focused on recentdevelopments or
policy
More lively as a problemquestion to
important to be able to distinguish
answer
pure economic loss from that which is merelythe financial outcome of tangible
physicaldamage or personalinjury
Remember there can always be recoveryfor consequential economic loss without
satisfying the followingprinciples
re
Introduction
often comes in the shape or failure to receive expected future profit or receipt of som
financial benefit or it may result from the acquisition of an item of defective
property or be due to propertydamagesustained by a third party
Along with psychiatric damage one of the two types of damage in which
duty of care is likely to be problematic or absent
I
, I Main reasons for this
1 Pure economic loss has historicallybeen seen as part of contract law tort law
has been mainly concerned with propertydamage personalinjury and death
2 Have been concerns about openingthefloodgates in terms of potentiallywidespread
and limitless losses
Historical background
To understand the scope and extent development of economic loss look at
the contrasting cases
Anns v Merton lateroverruled by MuPhy v Brentwood
initial recognition forpureeconomic loss But broad after completion block of
flats began to develop cracks and unstable froous HELD claimants suffered material
physicaldamage and ordered the council to compensate for repair costs
D's creation of defectiveproperty contract law regarded as damaged propert
for which there is a duty of care innegligence
Murphy v Brentwood DC overruling Anns shows uncertainty s Mataji if no duty
for pureeconomic loss C's house was built on inadequate foundations leading to cracke
walls he lost profit on the sale of the house HELD Anns had been wrongly
decided the loss said to be physicaldamage was pureeconomic loss not recover
buildinghad been fundamentally hawed from the start had never existed in an unflawed
state no physicaldamagedone
Consequential economic loss v pure economic loss
consequential not an issuefor the courts results from personalinjury or physical
damage
Murphy v Brentwood the economic loss is not a result of a physical damage
the
caused property had always existed in that state
Weller v Foot andMouthdisease cattle that got the disease was not owned by C
but they lost money that they would have gotten runningthe auctions theydidn'
own the property that was damaged no consequential loss no compensation
Spartan Steel v Martin power cut majorlyaffected C's metal maningfactory 3
claims
