Pure economic loss in English Law

Recovery for pure economic loss in English law, arising from negligence, has traditionally been limited. Notably, recovery for losses that are "purely economic" arise under the Fatal Accidents Act 1976; and for negligent misstatements, as stated in Hedley Byrne v. Heller. Economic loss generally refers to financial detriment that can be seen on a balance sheet but not physically. Economic loss is then divided into "consequential economic loss" - that which arises directly from some physical damage or injury (e.g. loss of earnings from having your arm cut off) and "pure economic loss", which is everything else.

The fear behind allowing claims for "pure economic loss" is that potentially unlimited claims could flood in. The risks may be unknowable, and parties would find it impossible to insure.[1][2] The U.S. judge Benjamin N. Cardozo famously described it as, "liability in an indeterminate amount, for an indeterminate time, to an indeterminate class".[3]

Examples of pure economic loss include:

The latter case is exemplified by the case of Spartan Steel and Alloys Ltd v. Martin & Co. Ltd.[8] Similar losses are also restricted in German law[9] though not in French law.[10]

Complex structure theory

The Complex structure theory is an argument which has been put forward in pure economic loss cases which suggests that a large chattel may be considered to consist of several parts and so damage to other "property" for the purpose of applying Donoghue v Stevenson principles. This theory as a normative doctrine has been rejected by Lord Bridge in Murphy v Brentwood.[11][12]

Key cases

References

  1. ↑ Canadian National Railway Co. v. Norsk Pacific Steamship Co. [1992] 1 SCR 1021 (Canada), per McLachlan J
  2. ↑ Bishop (1982)
  3. ↑ Ultramares v. Touche 174 N.E 441, 444 (N.Y. 1931) (USA)
  4. ↑ Baker v. Bolton (1808) 1 Camp 493 (England and Wales)
  5. ↑ Murphy v. Brentwood District Council [1991] 1 AC 398 (England and Wales)
  6. ↑ Sutherland Shire Council v. Heyman (1985) 60 ALR 1, at 60-61 (Australia)
  7. ↑ Winnipeg Condominium Corporation No.36 v. Bird Construction Co. [1995] 1 SCR 85 (Canada)
  8. ↑ [1973] QB 27
  9. ↑ van Gerven (2001) pp187-188
  10. ↑ van Gerven (2001) pp198-199
  11. ↑ Murphy Respondent v Brentwood District Council Appellants [1990] 3 W.L.R. 414 p. 478
  12. ↑ H. G. Beale, W. D. Bishop, Michael Philip Furmston, Contract, p34

Bibliography


This article is issued from Wikipedia - version of the 6/5/2016. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.