lecture 2 pure economic loss

8/18/2019 Lecture 2 Pure Economic Loss

1/12

NEGLIGENCE

Lecture 2 Pure Economic Loss


2/12

PURE ECONOMIC LOSS DEFINED

• What is Pure Economic Loss? – Pure economic loss ma !e "e#ne" as fnancial

loss su$ere" ! the claimant !ut unconcerne"%ith an physical injury to his or her person or property& It is' essentiall' a claim (or loss o((uture !ene#ts that is usually reme"ia!le incontract& Generall' in En)lish la%' there is noliability (or the causation o( *ure economic loss

! ne)li)ent acts see Elliott, Catherine;Quinn, Frances (2007). Tort a! see alsoCan"ler # Crane Christ$as % Co &''* 2+ '-


3/12

RE+SONING

• ,he term -*ure. su))ests a loss unconnecte" an"stan"in) a*art (rom other losses such as *ersonalin/ur& It there(ore cannot !e as a conse0uence o(resultin) in *hsical "ama)e to a *erson or

*ro*ert& Common cate)ories o( *ure economicloss are e1*en"iture' loss o( *ro#t' *ro#ta!ilit orloss o( some other (orm o( #nancial !ene#t& ,hereis a nee" to "etermine %hether a claim is

conse0uential or *ure economic loss' as the latteris usually not recoera!le in la% as "ama)es&


4/12

RE+SONING

FLOOD G+,ES ISSUE


5/12

M+3OR C+SE

• Can"ler # Crane Christ$as % Co &''* 2 + '- in this case'inestor relie" on the careless com*ilation o( #nancial statementcausin) economic loss& Court o( +**eal hel" that althou)h in thissituation' the accountant 4ne% that the #nancial statement %ill !erelie" u*on an "ut o( care in the relation to a"ice ! the

accountant %as to the o%ners& ,here e1iste" contractualrelationshi* !et%een them an" the "e(en"ant& 56iienne 7ar*%oo"'2888' *)9:;

• Dennin) L3 ar)ue" that the "e(en"ant not onl o%e" the "ut o(care to their em*loee or client an" the "e(en"ant he also o%e" a"ut o( care to an thir" *arties to %hom the themseles sho% the

#nancial statement& ,he accountant must consi"er that someone%ill rel on the statement to inest mone or ta4e action to their!ene#t& 56iienne 7ar*%oo"' 2888' *)9:;


6/12

REC+P

• When it is (air' /ust an" reasona!le to im*osea "ut o( care on the "e(en"ant' consi"er<

– the lia!ilit o( a "e(en"ant (or *ure economic losssu$ere" ! the claimant&

– the lia!ilit o( a "e(en"ant (or *schiatric in/ursu$ere" ! the claimant&

• ,he issues are the t*e o( "ama)e to %hich a

!reach o( "ut ma )ie rise an" thecate)or o( *lainti$ to %hom a "ut ma !eo%e"& Recall nns # 1erton C &'7*C 72


7/12

M+3OR C+SE

• nns # 1erton C &'7* C 72

• FCT34

• P.s =ats ha" structural "ama)e "ue to su!si"ence' Ps "i" not

sue !uil"ers 5%ho the ha" contract %ith;• Ps claime" a)ainst D' local council' ar)uin) D ne)li)entl

a**roe" !uil"in) *lans > or ne)li)entl (aile" to ins*ect!uil"in) %or4s

• 5336E4

• coul" Ps recoer in tort?

• E84

• 7ouse o( Lor"s< Ps coul" recoer (rom D' "es*ite no contract!et%een *arties' !ecause structural "ama)e %as material"ama)e to *ro*ert


8/12

M+3OR C+SE

• Spartan Steel & Alloys Ltd. v Martin & Co. [1973] QB 27

• FCT34

• *lainti$s 5P; o%ne" steel (actor' electricit su**lie" ! "irect ca!le o%ne" ! thir" *art 5Electricit

@oar";

• Ds carelessness carrie" out roa" %or4s > "ama)e" ca!le' Electricit @oar" ha" to shut "o%n *o%ersu**l to P.s (actor (or AB&hrs oerni)ht to men"

• (actor %or4e" 2Bhrs a "a' %hen *o%er sto**e" metal %as !ein) melt *rocesse" in (urnace 5%hichre0uire" constant tem*erature > there(ore *o%er;

• i( P le(t mi1ture in (urnace %ithout *o%er it coul" "ama)e machiner' so P use" alternatie metho" to*rocess' *ro"ucin) less alua!le material 5*hsical "ama)e< > loss o( *ro#t< B88;

• Ps also lost o**ortunit to loa" (urnace (urther B times "urin) *o%er cut 5losin) *ro#t< l 99;

• 5336E4

• %hich losses coul" P recoer?

• E84

• P coul" recoer< "ama)e to melt in (urnace %hen *o%er cut 5; > loss o( *ro#t on that melt 5B88;'

as cost o( *hsical "ama)e to P.s *ro*ert 5the melt; > conse0uential economic loss 5the lost *ro#t;• P not recoer< loss o( *ro#t "urin) %hole *erio" *o%er cut' as *ure economic loss cause" ! "ama)e to

*ro*ert o( thir" *art 5ca!le !elon)e" to Electricit @oar";

• Lor" Dennin)< && I thin4 the 0uestion o( recoerin) economic loss is one o( *olic& Wheneer the courts"ra% a line to mar4 out the !oun"s o( ."ut. the "o it as a matter o( *olic so as to limit theres*onsi!ilit o( the "e(en"ant&&&


9/12

Q6E9E

• Wat da!a"e did te de#endant$a%se to te $lai!ants property'

• Was not all te loss s%(ered p%relye$ono!i$'

• Wat is te ele!ent o# prin$iple or poli$y tat pre$l%des re$overy #or p%re e$ono!i$ loss'


10/12

C7+NGE IN POLIC

• 7o%eer' *ure economic loss is)enerall recoera!le %here the"e(en"ant ma !e sai"

• to hae oluntaril assume"res*onsi!ilit to the claimant to usereasona!le care in its

• un"erta4in)&

• ,he test is o!/ectie&


11/12

@+SIS FOR C7+NGE

• Reasona!le reliance ! the claimanton DJs s4ill

• +ctual or constructie 4no%le")e !D that claimant is so relin)K

• 6oluntar assum*tion o(res*onsi!ilit

• +!sence o( reasona!le care an" s4ill! D


12/12

SUMM+R

lecture 2 pure economic loss

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