Glad you think like this, always nice to have someone who's willing to help others out
Here's some notes on negligent misstatement (economic loss). If you haven't already done it, then ignore it and skim over them before learning about it. Should help you out
Negligent misstatement (economic loss)1) There needs to be special rules to deal with pure economic loss because the law of tort doesn’t generally allow recovery of compensation for pure economic loss (financial loss that is not the result of physical injury or property damage).
2) In
Spartan Steel and Alloys v Martin, compensation was recovered for the damage to the goods in production at the time of the power cut and the loss of profit that would have been made on those goods. The loss of profit (consequential economic loss) was a result of the damaged goods (physical damage). However, no damage had been caused to the products which would have been produced later that day.
3)
Brentwood Council was not liable for its negligence in not ensuring that the building foundation was sound because even though the Council had approved plans for the footings, the damage suffered by C was not material or physical damage.
4)
Lord Denning argued (dissenting decision) that defendants should owe a duty of care to prevent certain people suffering pure economic loss in the case of
Chandler v Crane Christmas.
5) Hedley Byrne- requirements that must be fulfilled for a ‘special relationship’ to exist are
1) the defendant must possess a special skill, 2) the claimant must rely on statement to his detriment/damage/loss, 3) the reliance must be reasonable, courts regard reliance as reasonable where it is foreseeable.
6) The decision in
Mutual Life v Evatt has been criticised because Mutual Life took on the responsibility of advising Evatt as to whether it was safe to invest in Palmer and implicitly indicated that he could rely on their ‘sound advice’. The narrow approach
Lord Diplock took in this case was that Evatt had failed to prove that the defendants’ held itself out as possessing any special expertise to judge whether it was safe to invest in Palmer. This lead to the conclusion that ‘the defendant will thus not be liable for statements made informally or during a social situation’.
7) In
Chaudhry v Prabhakar, the fact that Prabhakar had discouraged Chaudhry (friend) from getting a qualified mechanic to examine the care before buying it was a key fact in this case. By doing this, the defendant had indicated that his advice that the car was in good condition could be safely relied upon (the car was later discovered to have been in an accident).
8) In
JEB Fastener v Marks Bloom and Co, the rule that was illustrated was the claimant must rely on the statement to his detriment. In this case the claimant didn’t succeed because he hadn’t relied on the advice about the value of a company’s stock.
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10) In the case of
James McNaughten Papers v Hicks Anderson Co, the accountants did not owe a duty of care because the draft accounts were not prepared for their benefit, and the defendants would reasonably expect a party to a takeover to take independent advice and not rely solely on draft accounts.
11) In the case of
Morgan Crucible Co v Hill Samuel, the defendant was held liable by the Court of Appeal because the defendants had made representations to the claimants, who were contemplating of taking over the company. The defendants persuaded the claimants to increase their big however, the claimants soon discovered that they’d bid too high. If proved, the claimants had an arguable claim against the defence.
12) ‘Extended Hedley Byrne’ liability is when a liability that should be imposes doesn’t fit under the negligence of economic loss (from personal injury, damage to property or a negligent misstatement). This is because there’s normally difficulty arisen when the courts clearly want to impose liability but there’s an absence of reliance on the claimants part. This has been called ‘wills cases’. This was shown in the case of
Ross v Caunters, where a solicitor was liable for the claimant’s economic loss, despite there being no ‘reliance’ on the solicitor.
13) In
White v Jones, Lord Geoff decided that the solicitor had to be held liable to the beneficiaries of the will and gave a leading judgement. That the problem in not allowing the claim would be that the testator and his estate would have a valid claim but have suffered no loss, while the beneficiary would have suffered a loss but have no claim. This would result in no potential claim against a negligent solicitor.