3. Liability For Negligently Caused Economic Loss - Delict

Front 1

What forms may economic loss take?

Back 1

Derivative, secondary and pure

Front 2

In what circumstances may intentionally caused economic loss be recovered?

Back 2

If it is caused unlawfully i.e fraud intimidation etc.

Front 3

What is derivative economic loss?

Back 3

Losses which follow from wrongful invasions of a reparable interest. i.e loss of wages due to inability to work after personal injury

Front 4

What form of loss for from wrongful invasion of reparable interests?

Back 4

derivative

Front 5

What is secondary economic loss?

Back 5

Financial loss consequent on harm caused negligently to someone else or their property. i.e loss of production in a factory due to a person negligently cutting a power cable owned by another other than the pursuer

Front 6

What is loss consequent on harm cause negligently to another or their property?

Back 6

Secondary economic loss

Front 7

What was held in Dynamco v Holland, Hannen & Cubbits 1971?

Back 7

Pursuers lost production in their factory due to the defender negligently cutting a power line. The line was the property of an electric company not the pursuers; losses were secondary therefore not recoverable.

Front 8

What case concerned a cut power cable being a secondary economic loss and not recoverable?

Back 8

Dynamco v Holland, Hannen & Cubbits 1971

Front 9

What was held in Hedley-Byrne v Heller and Partners 1964?

Back 9

Hedley-Byrne enquired as to the financial position of a firm through their bank with a view to doing business wit them. Heller, the firm's bank, stated the firm were in a good position. The firm later went into liquidation leaving Hedley-Byrne with losses arising form their performance. It was held that there was a duty of care. (Liability was excluded due to a clause in this case however)

Front 10

Why was there a duty of care in Hedley-Byrne v Heller & Partners 1964?

Back 10

A duty of care to not cause economic loss will arise when there has been an assumption of responsibility on the part of the defenders. The pursuers must have relied on the defender to exercise a duty as the circumstances required, this reliance must have been reasonable and the defender must have known or ought to have known that the pursuer would rely on the statement.

Front 11

What was held in Martin v Bell Ingram 1986

Back 11

A surveyor under contract with a building society owed a duty of care to the prospective purchaser of a house provided they know their report will be relied upon by that pursuer.

Front 12

What was held in Esso Petroleum Co v Mardon 1976?

Back 12

Owners of a petrol station made a careless misstatement of how much petrol the station sold to a prospective tenant. That tenant then took up tenancy in reliance on the statement. It was held that the owners had held themselves out as having a special expertise in the circumstances which created a duty of care.

Front 13

What case shows that if someone holds themselves out as an expert, and those expertise are relied upon they will have breached a duty if the statement made is found to be untrue?

Back 13

Esso Petroleum Co v Mardon 1976

Front 14

What case shows a duty of care to not cause economic loss will arise when there has been an assumption of responsibility on the part of a statement maker?

Back 14

Hedley-Byrne v Heller & Partners 1964

Front 15

What was held in Caparo Industries v Dickman 1990?

Back 15

A negligently prepared company audit could not be used to found a claim where company shareholders successfully mounted a takeover bid on the strength of those accounts. The negligent auditors would have had to know who would rely on it specifically to satisfy proximity requirements.

Front 16

What was held in Henderson v Merret Syndicated ltd (No 1) 1994?

Back 16

The policy actors in the third part of the caparo test may be ignored when there is assumption of responsibility. This assumption may be inferred from the parties relationship, conduct or contractual terms.

Front 17

What was held in Roayl Bank of Scotland plc v Bannerman, Johnstone Maclay?

Back 17

A pursuer need not prove that a defender intended to assume responsibility.

Front 18

What act and section applies to whether attempts to negate liability for negligence once a duty is established will have effect?

Back 18

S.25(5) UCTA 1977

Front 19

What does the UCTA 1977 S.25(5) apply to in the context of economic delict?

Back 19

whether attempts to negate liability for negligence are fair and reasonable, and therefore enforceable or not.

Front 20

What was held in Bank of Scotland v Fuller Peiser 2002?

Back 20

Mrs Mackay sought a valuation on a hotel. BoS, who were lending the money for her purchase requested a survey from surveyors directly. The transaction went ahead with BoS providing a standard security (Scottish mortgage). Mackay defaulted and the bank sold the hotel; the sale did not amount to the value of the debt. The survey had been negligently carried out. The defenders relied on a disclaimer to evade liability. As the parties were of equal bargaining power this disclaimer was reasonable and liability was excluded.

Front 21

What was held in White v Jones? [English authority]

Back 21

Dissapointed beneficiaries could recover in tort in respect of a will which was not drawn up at all. This was followed in Scotland in Holmes v Bank of Scotland.

Front 22

What is the first question to be asked in novel cases of economic loss?

Back 22

was there an assumption of responsibility.

Front 23

What is the effect of a voluntary assumption of responsibility in novel cases of economic loss?

Back 23

The existence of a duty can be determined without invoking policy considerations from Caparo.

Front 24

What is the effect of there being no voluntary assumption of responsibility in cases of novel economic loss?

Back 24

Caparo rules will be applied.

Front 25

What was held in Junior Books v The Veitchi Company ltd 1983?

Back 25

A subcontractor had no direct contractual relationship with the owners of a building. Defective flooring was put in place by the subcontractors (veitchi). While this was purely economic loss the subcontractors knew the identity of the owners, and knew they would rely on their skills. As they knew that careless performance on their part would result in economic loss to Junior Books they were held liable. It is important to note there were a series of concurrent contractual relationships binding the parties.

Front 26

What is the effect of pure economic loss arising from a situation where there is a series of contracts operating at the same time, the defender knows of the pursuer's existence and that they are relying on the defender's skill? Which case demonstrates this?

Back 26

There will be liability for negligently caused economic loss arising from the work done due to Junior Books v The Veitchi Company ltd 1983