The Murphy rule, and the “qualification”
Legal and construction practitioners will no doubt be familiar with the general rule, established in Murphy v Brentwood District Council, that pure economic losses are only recoverable if they flow from a breach of contractual duty .
Can you claim for pure economic loss in negligence?
These two losses are known as “pure economic loss”. They are generally not recoverable in negligence . This is because a duty of care must be consistent with an assumption of responsibility.
When can you claim pure economic loss?
Pure economic loss is financial damage suffered as the result of the negligent act of another party which is not accompanied by any physical damage to a person or property.
What must a claimant in an action for negligence prove?
To prove negligence, a claimant must establish: a duty of care; a beach of that duty; factual causation (‘but for’ causation), legal causation; and damages . ... The claimant has the burden of proof and must proof his/her case beyond the balance of probabilities. The key question arises here concerning a duty of care.
What is economic loss in negligence?
From Wikipedia, the free encyclopedia. Economic loss is a term of art which refers to financial loss and damage suffered by a person which is seen only on a balance sheet and not as physical injury to person or property.
What is pure financial loss insurance?
Pure Economic Loss
They are basically financial damage suffered thanks to the negligence of another party — excluding any physical damage to a person or property. In other words – these losses are purely economic.
What types of loss are recoverable from a successful claim of negligence?
- Compensation for loss of chance. ...
- Compensation for diminution in value. ...
- Compensation for wasted expenditure. ...
- Compensation for additional legal costs.
How do I claim economic losses?
- A special relationship between the parties.
- A voluntary assumption of responsibility by the party offering the advice.
- Reliance on that advice by the party receiving it.
- The reliance must be reasonable.
Why did the claimant in Donoghue v Stevenson bring her action in tort of negligence instead of contract?
Mrs Donoghue was not able to claim through breach of warranty of a contract : she was not party to any contract. Therefore, she issued proceedings against Stevenson, the manufacture, which snaked its way up to the House of Lords.
What causes economic loss?
Economic loss may be caused by a natural disaster , such as a hurricane, or by the negligence of another party. ... In cases of pure economic loss, the only thing that is lost is money. Consequential economic loss is loss that is directly caused by another event, including events like property loss or defective products.
How do courts distinguish between pure and consequential economic loss?
However “purely economic” loss in English law is rare in nature but can arise under the Fatal Accidents Act 1976 and for negligent misstatements, as stated in Hedley Byrne v. Heller. On the other hand consequential economic loss results directly from personal injury or property damage .
What 3 elements must be present to prove negligence?
There are specific elements that a plaintiff (the injured party) must prove in order to make a negligence claim. These are duty of care, breach and causation . If a plaintiff successfully proves these three elements, then the final part of a negligence claim involves damages.
What is the difference between pure economic loss and consequential economic loss?
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 physical injury is caused to the deceased, not the family.
Why does the claimant in a negligence action have to prove that the defendant owed him a duty of care to refrain from negligence?
In this element the claimant simply has to prove that the loss or damage was a direct consequence of the defendant’s breach of duty of care . ... All the claimant has to prove is that if it were not ‘but for’ the actions of the defendant then they would not have suffered the loss or damage.
What are the essential elements of negligence?
- 1) Duty Of Care. ...
- 2)The Duty must be towards the plaintiff. ...
- 3)Breach of Duty to take care. ...
- 4)Actual cause or cause in fact. ...
- 5)Proximate cause. ...
- 6)Consequential harm to the plaintiff. ...
- 1)Contributory negligence by the plaintiff. ...
- 2) An Act of God.
Why is the law relating to pure economic loss so restrictive?
Restricting liability
The theory underlying limiting claims for pure economic loss is that these losses are potentially limitless . Without the special rule for economic loss, the floodgates would be open for an indeterminate number of claimants making claims for limitless amounts.
Which of the following are examples of economic damages?
Economic damages may include past and future medical expenses , past and future lost wages, household services, vocational rehabilitation, property damages, out-of-pocket expenses, and lost earning capacity. Medical expenses are bills that arise out of the injuries that are caused by the accident.
What is the basis of assessment of damages in a professional negligence claim against a firm of solicitors arising from their poor handling of a client’s litigation?
Generally, in contract and tort, damages are assessed at the date of breach. In professional negligence claims and in the giving of professional advice to assess losses resulting from negligent advice is found by comparing the client’s position if there had been no breach of duty and the client’s actual position.
What is pure economic loss Australia?
“Pure” economic loss in Australia law
Australian law has always treated negligence claims for “pure” economic loss, actions in which the claimant has lost money but not been physically injured , as different to other kinds of negligence claims.
What duty is the claimant under in relation to any losses they may have suffered?
Negligence—a duty of care is required. For negligence to be established, the defendant must owe the claimant a duty to take reasonable care not to inflict damage on him or her.
What are the 3 types of tort?
Torts fall into three general categories: intentional torts (e.g., intentionally hitting a person); negligent torts (e.g., causing an accident by failing to obey traffic rules); and strict liability torts (e.g., liability for making and selling defective products – see Products Liability).
What is meant by economic loss?
Total financial loss resulting from the death or disability of a wage earner , or from the destruction of property. Includes the loss of earnings, medical expenses, funeral expenses, the cost of restoring or replacing property, and legal expenses.
Why did Mrs Donoghue wish to bring a claim?
Legal background
Donoghue was therefore required to claim damages for negligence . Ansell v Waterhouse had established in 1817 that legal liability could arise for an act or omission “contrary to the duty which the law casts on him in the particular case” (i.e. negligence).
What did Donoghue v Stevenson establish?
Donoghue v Stevenson is the landmark case in tort law. The wider importance of the case is that it established the general principle of the duty of care concept in law . The test was formulated by Lord Atkin and it is generally referred to as the “neighbour test” or “neighbour principle”.
What is the significance of Donoghue vs Stevenson?
In 1932 Lord Atkin handed down a judgment that would become one of the most significant cases of the common law world, Donoghue v Stevenson. This case established the foundation of negligence law that is still used today in Queensland – the concept of duty of care.
What is consequential economic loss in tort?
A financial loss that is a direct result of personal injury or property damage caused in negligence .
What is a negligence claim?
Probably one of the most common types of personal injury lawsuits involves a claim of negligence. Negligence describes a situation in which a person acts in a careless (or “negligent”) manner , which results in someone else getting hurt or property being damaged.
What are the 3 levels of negligence?
There are generally three degrees of negligence: slight negligence, gross negligence, and reckless negligence . Slight negligence is found in cases where a defendant is required to exercise such a high degree of care, that even a slight breach of this care will result in liability.
What are the principles of negligence?
7.4 So far as concerns the duty of care in the tort of negligence, the basic principle is that a person owes a duty of care to another if the person can reasonably be expected to have foreseen that if they did not take care, the other would suffer personal injury or death .
What is consequential loss in tort law?
In assessing damages for breach of contract: Consequential loss (also known as indirect loss) arises from a special circumstance of the case , not in the usual course of things. ... Direct loss is the natural result of the breach in the usual course of things.
Can you sue for economic loss?
The Economic Loss Doctrine (ELD) has been adopted by a majority of jurisdictions in the United States and exists to prohibit parties from recovering in tort when the negligence of others results in purely economic loss.
