PURE ECONOMIC LOSS
TEST
1) Is there financial loss?
2) Is there damage?
3) If the person suffering the damage is not the same as
the person suffering the financial loss then it is pure
economic loss.
At first the courts were reluctant to recognise it at all for
fear of
a) floodgates
b) difficult to measure damage
c) fake and exaggerated claims – when theres no tangible
loss there’s more danger of lies and hyperbole in claims.
Cattle v Stockton Waterworks
Established the exclusionary rule (along with the Simpson
case) The exclusionary rule excludes recovery for pure
economic loss claims.
The reason was the danger of indeterminate liability > ‘for an
indeterminate amount for an indeterminate time to an
indeterminate class’ as well as the rationale that people are
entitled to pursue their own economic goals in self-interest
without having to worry about loss to a third party. (liability
to the world at large).
, EXCEPTIONS
Time Charterers/Charterers
The Winkfield case 1902
Established the bailee’s can recover for damages from the
tortfeasor even if they’re not the owner of the chattel. The
rule is that a bailee is to be treated as the owner of goods
while in their possession.
Joint Ventures
Maine v Leask 1910
A boat became inoperable due to tortfeasors negligence and
the owners of the nets, the crew and the owner of the ship
could all recover. This is because they’ve all put their profits
in for a purpose.
ENGLAND
Follow an incremental approach however are the most
regulated of jurisdictions in allowing recovery. Do not have a
flexible approach as they have the exclusionary rule in
operation. They favour avoiding liability wherever
possible/most time as these cases are more appropriately
dealt with in contract law.
Spartan Steel & Alloys Ltd v Martin & Co Ltd 1973
P has a factory and D’s negligence causes an electricity cut.
TEST
1) Is there financial loss?
2) Is there damage?
3) If the person suffering the damage is not the same as
the person suffering the financial loss then it is pure
economic loss.
At first the courts were reluctant to recognise it at all for
fear of
a) floodgates
b) difficult to measure damage
c) fake and exaggerated claims – when theres no tangible
loss there’s more danger of lies and hyperbole in claims.
Cattle v Stockton Waterworks
Established the exclusionary rule (along with the Simpson
case) The exclusionary rule excludes recovery for pure
economic loss claims.
The reason was the danger of indeterminate liability > ‘for an
indeterminate amount for an indeterminate time to an
indeterminate class’ as well as the rationale that people are
entitled to pursue their own economic goals in self-interest
without having to worry about loss to a third party. (liability
to the world at large).
, EXCEPTIONS
Time Charterers/Charterers
The Winkfield case 1902
Established the bailee’s can recover for damages from the
tortfeasor even if they’re not the owner of the chattel. The
rule is that a bailee is to be treated as the owner of goods
while in their possession.
Joint Ventures
Maine v Leask 1910
A boat became inoperable due to tortfeasors negligence and
the owners of the nets, the crew and the owner of the ship
could all recover. This is because they’ve all put their profits
in for a purpose.
ENGLAND
Follow an incremental approach however are the most
regulated of jurisdictions in allowing recovery. Do not have a
flexible approach as they have the exclusionary rule in
operation. They favour avoiding liability wherever
possible/most time as these cases are more appropriately
dealt with in contract law.
Spartan Steel & Alloys Ltd v Martin & Co Ltd 1973
P has a factory and D’s negligence causes an electricity cut.
