Tort pure economic loss cases PDF

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[1] Definition: PEL/CEL • PE is a financial loss which is not derived from another tangible damages (e.g. personal injury, property damages) whereas CEL is a financial loss which is a direct result of another harm. • The difference is well illustrated in , where the defendant negligently cut a power supply to the claimant's steel factory. In this case, three types of damages occurred; physical damage to the metal (property damage) and the loss of profit based on the steel (CEL) was recoverable, but the ‘anticipated profit’ during power cut was PEL and not recoverable. [2] General Exclusionary Rule • PEL is generally not recoverable in the tort of negligence. The justification of this is mostly based on policy reasons. 1.indeterminacy - to avoid indeterminate liability to indeterminate class - as Lord Reid said in “words can be broadcast with or without foresight of the speaker… it would be going very far to say that he owes a duty to every ultimate consumer”

• typical example of HB liability involves a two-party situation. That is, A gives information to B which B relies upon to his detriment. / However, case law after HB extended the duty in favour of third-party recipient. 1) Lack of consistency in determining (b)and(c) • provision of information for particular purpose cannot be reasonably relied on for other purpose, because there is no assumption of risk in relation to that other purpose. - reliance was not reasonable: company audits were for shareholders not investors. • By contrast, and accepted there were assumption of risk for @@. Law society’s reliance on law firm’s annual accounts was protected, despite the accountants claimed the annual account was just for the law firms. (their clients) Although the survey was provided primarily for mortgage lender, it was deemed reasonable that home buyers also relied on it. 2) expansion of principle • In Hedley principle was extended to ‘writing of reference’.

2)contract: PEL is historically regarded as the province of contract law. Hence, not to undermine the role of contract law. 3)insurance: not to interfere too much with the role of insurance.

• This reasoning was expanded in . Expanding on , Lord Goff made it clear that the liability under can include the ‘performance of services’.

[3] Exceptions However, there are limited exceptions where PEL is recoverable. Roughly, recovery is allowed for statement-based losses (misstatement), but not for action-based losses (e.g. defective product).

(1) will cases • The principle of (b) and (c) became even more problematic in so-called ‘will cases’. These cases expanded to the solicitors’ advice regarding wills.

misstatement 1.elements ‒ In relation to misstatement, principle forms the basis. It requires (a)special relationship, (b)assumption of risk, (c)reasonable reliance: the elements are overlapped, as ‘reliance’ and ‘assumption of risk’ are part of what makes special relationship.

• it was held that the ‘special relationship’ between the solicitor and the client (testator) extended to the intended beneficiaries of the will. - However, these cases are hard to reconcile with , since the solicitors may have assumed responsibility for their clients, but not to the intended beneficiaries. - these judgments seem to be the result of achieving ‘practical justice’ (as Lord Goff emphasised), because otherwise the claimants had no means of recovery. (they were not contractual party) Also, the court may

2.case laws : extension and limits In this area, case law seems incoherent.

have intended to prevent solicitors getting away with negligence....