Economic Loss
Economic loss
Negligence covers a broad range of scenarios. Trespass to the person is actionable per se. The mere fact that your rights have been infringed means that you can sue. In negligence this is not the case. It needs to be shown that you have suffered damages. The damages in negligence can be economic loss. In Caparo the three stage test, Lord Bridge stated:
“It is never sufficient to ask simply whether A owes B a duty of care. It is always necessary to determine the scope of the duty by reference to the kind of damage from which A must take care to save B harmless.”
The kind of damage received goes to whether there is a duty or not. The Common Law draws a distinction between consequential economic loss and pure economic loss. Majority of cases looked at in Tort Law; the claimants are suing for money. Economic Losses are purely financial and fiscal losses suffered. The key distinction is as follows:
Consequential Economic Loss - Personal injury and property damage may have economic consequences e.g. loss of future earnings for personal injury, loss of profits on sale of property which is damaged. This is a consequence of a personal injury or property damage. Generally these are recoverable.
Pure Economic Loss - Financial damage might be caused independently of any personal injury and property damage. Physical damage cannot be attributed too.
It has been asked in what circumstances can pure economic loss that has not been adulterated by personal injury or property damage. The general rule is in negligence and not through other torts is that economic loss cannot be recoverable. This is illustrated by the famous Court of Appeal Decision in:
Spartan Steel and Alloys v Martin & Co
FACTS: The claimants manufactured stainless steel alloys at a factory 24 hours a day. The defendants’ employees who were working on a nearby road damaged the electrical supply cable to the factory. The electricity board shut off the power supply to the factory for 3 days.
Negligence covers a broad range of scenarios. Trespass to the person is actionable per se. The mere fact that your rights have been infringed means that you can sue. In negligence this is not the case. It needs to be shown that you have suffered damages. The damages in negligence can be economic loss. In Caparo the three stage test, Lord Bridge stated:
“It is never sufficient to ask simply whether A owes B a duty of care. It is always necessary to determine the scope of the duty by reference to the kind of damage from which A must take care to save B harmless.”
The kind of damage received goes to whether there is a duty or not. The Common Law draws a distinction between consequential economic loss and pure economic loss. Majority of cases looked at in Tort Law; the claimants are suing for money. Economic Losses are purely financial and fiscal losses suffered. The key distinction is as follows:
Consequential Economic Loss - Personal injury and property damage may have economic consequences e.g. loss of future earnings for personal injury, loss of profits on sale of property which is damaged. This is a consequence of a personal injury or property damage. Generally these are recoverable.
Pure Economic Loss - Financial damage might be caused independently of any personal injury and property damage. Physical damage cannot be attributed too.
It has been asked in what circumstances can pure economic loss that has not been adulterated by personal injury or property damage. The general rule is in negligence and not through other torts is that economic loss cannot be recoverable. This is illustrated by the famous Court of Appeal Decision in:
Spartan Steel and Alloys v Martin & Co
FACTS: The claimants manufactured stainless steel alloys at a factory 24 hours a day. The defendants’ employees who were working on a nearby road damaged the electrical supply cable to the factory. The electricity board shut off the power supply to the factory for 3 days.