Question on Pure Economic Loss:
Describe and analyse, citing the relevant case law, the approach of the English
courts to economic loss caused by the provision of services in the tort of
negligence
Add hedley bryne and SR extended in merit Syndicate and cut the additional
historical details
Answer:
The statement mentioned-above requires us to describe and analyse, the approach of the
English Courts to economic loss caused by the provision of services in the tort of negligence by
citing relevant case law. In the essay below, we will firstly describe the concept of pure
economic loss then we will discuss what have been the approach of the English Courts to
economic loss. Lastly, we will see why policy issues have been given such priority and PEL is
covered under tort law.
The court distinguished some type of losses in ‘Spartan Steel & Alloys Ltd v Martin & Co. These
are known as Pure economic loss and consequential loss. For policy reasons PEL is not
compensated under tort law these reasons such as, economic interests are intrinsically less
worthy of protection than physical interests. It is difficult to prove, and if economic loss
generally is recoverable, the burden on particular defendants will be unbearably high which can
be termed as ‘crushing liability’. Claimants can often make good in their economic loss and in
other ways than by claiming compensation, i.e. if a factory has to shut down because of loss of
power, it may be possible to make up for lost production by having extra shifts later. It may
make more economic sense for potential claimants to ensure against possible economic losses
that they may suffer rather than potential defendants to ensure against economic losses that
they may cause. It allows economic loss to be recovered in tort muddles the boundary between
contract and tort.
There are two types of exception, negligent misstatement and negligent provision for services.
Our focus will be on negligent provision for services because the question demands a discussion
on negligent provision. The principle of negligent provision for services was decided in the
‘Hedley Byrne’, where the Hedley Bryen principles were extended from misstatements to
negligent provision of services in Henderson Merit Syndicate and William v Natural Life Health
Foods.
In the case of “White v Jones” it was seen that the DOC for Pure Economic Loss can be given
even where there is no reliance provided, the person who has relied has died and suffered no
pure economic Loss. While the person who has not relied has suffered PEL. This was again seen
in ‘Gorham v BT where DOC for PEL was established without reliance where the facts were
similar to White case, but were in the context of pensions.
Describe and analyse, citing the relevant case law, the approach of the English
courts to economic loss caused by the provision of services in the tort of
negligence
Add hedley bryne and SR extended in merit Syndicate and cut the additional
historical details
Answer:
The statement mentioned-above requires us to describe and analyse, the approach of the
English Courts to economic loss caused by the provision of services in the tort of negligence by
citing relevant case law. In the essay below, we will firstly describe the concept of pure
economic loss then we will discuss what have been the approach of the English Courts to
economic loss. Lastly, we will see why policy issues have been given such priority and PEL is
covered under tort law.
The court distinguished some type of losses in ‘Spartan Steel & Alloys Ltd v Martin & Co. These
are known as Pure economic loss and consequential loss. For policy reasons PEL is not
compensated under tort law these reasons such as, economic interests are intrinsically less
worthy of protection than physical interests. It is difficult to prove, and if economic loss
generally is recoverable, the burden on particular defendants will be unbearably high which can
be termed as ‘crushing liability’. Claimants can often make good in their economic loss and in
other ways than by claiming compensation, i.e. if a factory has to shut down because of loss of
power, it may be possible to make up for lost production by having extra shifts later. It may
make more economic sense for potential claimants to ensure against possible economic losses
that they may suffer rather than potential defendants to ensure against economic losses that
they may cause. It allows economic loss to be recovered in tort muddles the boundary between
contract and tort.
There are two types of exception, negligent misstatement and negligent provision for services.
Our focus will be on negligent provision for services because the question demands a discussion
on negligent provision. The principle of negligent provision for services was decided in the
‘Hedley Byrne’, where the Hedley Bryen principles were extended from misstatements to
negligent provision of services in Henderson Merit Syndicate and William v Natural Life Health
Foods.
In the case of “White v Jones” it was seen that the DOC for Pure Economic Loss can be given
even where there is no reliance provided, the person who has relied has died and suffered no
pure economic Loss. While the person who has not relied has suffered PEL. This was again seen
in ‘Gorham v BT where DOC for PEL was established without reliance where the facts were
similar to White case, but were in the context of pensions.
