pure economic loss liability rules(1)
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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
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Damage to a third party's propertyC 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])
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No physical damagePEL / 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])
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defective flooring new factory / negligent sub contractor / recover: confirmed Anns v Merton LBC [1978] property damage definition (Junior Books v Veitchi [1983])
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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
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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
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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
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PEL for defective goods / recover in tort / only if special relationship between C & D (duty of care owed)•
bits of law