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PURE ECONOMIC LOSS: RULES

[FLASH CARD 1 OF 2]
general rule: D not owe duty of care to C not to cause pure economic loss (PEL) / loss not recoverable
limited duty situation / only recover exceptionally / if sufficiently proximate relationship between C & D
consequential economic loss: if C suffers personal injury or property damage / recoverable / PEL: loss not consequential
from personal injury or damage to property

Damage to a third party's property


C suffers PEL / due D negligently damaging 3rd party's property / no proximity D & A / no duty owed / PEL not recoverable
factory power cut / D damaged 3rd party power cable / recover: physical property damage (melt) & consequential (melt loss
profit) / not: profit of potential production (PEL) / policy limit D's liability (Spartan Steel v Martin [1973])

No physical damage
PEL / no damaged property / not recoverable
cattle market closure / PEL / not recoverable (Weller v Foot & Mouth Disease Research Institute [1966])

bits of law
PURE ECONOMIC LOSS: RULES
[FLASH CARD 2 OF 2]
Defective goods or property
general rule: defective goods claim / under contract law / not tort
flats structural damage / council negligent approval plans & inspection / HoL: recoverable / material damage to property /
controversial: no contract / traditional: property damage only existing property & here original defective (Anns v Merton
LBC [1978])

defective flooring new factory / negligent sub contractor / recover: confirmed Anns v Merton LBC [1978] property damage
definition (Junior Books v Veitchi [1983])

decisions criticised: floodgates even if D & C no relationship / tort action interferes & undermines contract law
Murphy v Brentwood DC [1991]
new build house / defective foundation design / repair: 45 000 / sold unrepaired 35 000 less market value / council
negligently approved plans

HoL: not recover / defective when acquired so PEL / overrules Anns v Merton LBC [1978]
building structural damage / not apply complex structure theory: if component defective & damages whole property then
classed as property damage

Lord Bridge: '.. in the absence of a special relationship of proximity imposing on the tortfeasor a duty of care to
safeguard the plaintiff from economic loss...' / distinguished Junior Books v Veitchi [1983]: exception satisfied /
special relationship due to discussions

PEL for defective goods / recover in tort / only if special relationship between C & D (duty of care owed)

bits of law

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