Economic Loss Tort Essay

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Recovery at law for pure economic loss is restricted under some circumstances in some jurisdictions, in particular in tort in common law jurisdictions, for fear that it is potentially unlimited and could represent a "crushing liability" against which parties would find it impossible to insure.

Justice Cardozo's indeterminacy concerns were relied on by the Supreme Court of Canada to restrict imposing liability on a corporation's auditors for negligently auditing the corporation's financial statements.

In Malaysia, the Federal Court in Majlis Perbandaran Ampang v Steven Phoa Cheng Loon [2006] 2 AMR 563 followed the decision in Caparo Industries v Dickman [1990] UKHL 2 where it held; pure economic loss is claimable if 1) the damage was foreseeable, 2) the relationship between the parties was one of sufficient proximity, and 3) it is fair, just and reasonable to impose a duty of care on the defendant. Cardozo of the New York Court of Appeals famously described pure economic loss as "liability in an indeterminate amount, for an indeterminate time, to an indeterminate class".

The rule may also be traced back to Roger Traynor's decision in the California case Seely v. (1965), and was later adopted by the Supreme Court of the United States in East River Steamship Corp V Transamerica Delaval Inc. A few state supreme courts in the United States have departed from the majority rule and authorized recovery for pure economic loss through tort causes of action (usually negligence).

This study suggests that pure economic loss should be regarded as the internalisation of positive externalities through a mechanism (tort law) primarily designed for negative externalities.

The pure economic loss problem is a problem of choosing between secondbest solutions, because tort law generally fails to provide first-best internalisation of both types of externalities.Licensed under GNU Free Documentation License" data-lightbox="media-gallery-1567819625" English: Notice excluding duty of care to farm visitors This notice is outside Rennard Pig Farm at Deeps, but it is a standard notice seen on many farms in Ireland. Licensed under CC Attribution Share Alike 2.0 license" data-lightbox="media-gallery-1567819625"But other than that, the various topics that are dealt with under the heading of 'pure economic loss' seem to have little in common.The concept of 'pure economic loss' covers very dissimilar subjects such as liability for negligent statements (on which the plaintiff reasonably relied), ricochet damage to third parties in case of personal injury, and liability for inducing (or profiting from) breach of contract.There is a fundamental distinction between pure economic loss and consequential economic loss, as pure economic loss occurs independent of any physical damage to the person or property of the victim.It has also been suggested for it to be called "commercial loss" as injuries to person or property could be regarded as "economic".However, it is submitted that the distinction is explicable on the basis that, whereas an individual's personality is partly constituted by the property that he or she owns, so that property can be seen as essential to the ways in which individuals constitute and define themselves, no such claim can be made with respect to mere abstract holdings of wealth.Although wealth permits the acquisition of property and participation in activities and experiences which might help to constitute and define the self in the future, the very fact that wealth has not been transposed into these things precludes it from being considered as important as actual holdings of property.The first was California in 1979, In addition, liability for pure economic loss may be imposed under German law in the case of special relationships, such as the relationship of a guardian to a ward, in which the guardian may be subject to liability for pure economic loss if the guardian is at fault.Executive Summary: This study emphasises the divergence between the legal approach to pure economic loss and the economic one, and focuses on the latter.By continuing to use this site, you consent to the use of cookies.We use cookies to offer you a better experience, personalize content, tailor advertising, provide social media features, and better understand the use of our services.

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