Negligence Flow Chart (3c): Pure Economic Loss
Pure economic loss is the financial loss which is not a consequence of personal injury ot the
C or damage to the C’s property.
The distinction between pure and consequential is important. The starting point for pure
economic loss is that no duty is owed. Therefore, it is important to recognise pure economic
loss (consequential is financial loss after personal injury or property damage).
Even if pure loss is foreseeable from the negligence, does not mean that there is a duty of
care. Foreseeability is not sufficient to grant a duty of care.
1. The starting point
'In actions of negligence, when the plaintiff has suffered no damage to his person or
property, but has only sustained economic loss, the law does not usually permit him to
recover that loss.'
In actions of negligence, when the plaintiff has suffered no damage to his person or
property, but has only sustained economic loss, the law does not usually permit him to
recover that loss.
Generally, in those cases in which a duty of care extending to pure economic loss will be
imposed, this will because the defendant is taken to have assumed responsibility for such
harm
2. Has a duty of care been assumed?
In principle, if there is no assumption of responsibility, there may still be a DoC if they can
satisfy the three-stage test, as assumption of responsibility requires a heightened degree of
responsibility. Assumption of responsibility is fact specific and does not rely on precedence.
The argument that a duty can only arise for assumption of responsibility was rejected in
Customs and Excise v Barclays, however it is the first test.
There are three factors:
(1) D’s statement was relied upon for the same reason as the statement was made.
Hedley Bryne v Heller: a duty might be owed where the purpose of the statement was the
same as the purpose for which it was relied on. This counts even if the statement was given
free of charge.
Caparo v Dickman: if there is no direct alignment between the purpose of the statement
and the reliance, then there is no duty. The requirements of a statutory duty cannot be
skewed to serve a different interest.
WBA FC v El-Safty: if you hire someone to advise on a specific issue, you cannot sue them
for not considering the wider interests.
Pure economic loss is the financial loss which is not a consequence of personal injury ot the
C or damage to the C’s property.
The distinction between pure and consequential is important. The starting point for pure
economic loss is that no duty is owed. Therefore, it is important to recognise pure economic
loss (consequential is financial loss after personal injury or property damage).
Even if pure loss is foreseeable from the negligence, does not mean that there is a duty of
care. Foreseeability is not sufficient to grant a duty of care.
1. The starting point
'In actions of negligence, when the plaintiff has suffered no damage to his person or
property, but has only sustained economic loss, the law does not usually permit him to
recover that loss.'
In actions of negligence, when the plaintiff has suffered no damage to his person or
property, but has only sustained economic loss, the law does not usually permit him to
recover that loss.
Generally, in those cases in which a duty of care extending to pure economic loss will be
imposed, this will because the defendant is taken to have assumed responsibility for such
harm
2. Has a duty of care been assumed?
In principle, if there is no assumption of responsibility, there may still be a DoC if they can
satisfy the three-stage test, as assumption of responsibility requires a heightened degree of
responsibility. Assumption of responsibility is fact specific and does not rely on precedence.
The argument that a duty can only arise for assumption of responsibility was rejected in
Customs and Excise v Barclays, however it is the first test.
There are three factors:
(1) D’s statement was relied upon for the same reason as the statement was made.
Hedley Bryne v Heller: a duty might be owed where the purpose of the statement was the
same as the purpose for which it was relied on. This counts even if the statement was given
free of charge.
Caparo v Dickman: if there is no direct alignment between the purpose of the statement
and the reliance, then there is no duty. The requirements of a statutory duty cannot be
skewed to serve a different interest.
WBA FC v El-Safty: if you hire someone to advise on a specific issue, you cannot sue them
for not considering the wider interests.
