2.2.1 Economic Loss Lecture - Introduction

Welcome to the second lesson of the second topic in this module guide – Economic Loss! Economic loss that is not linked to physical damage will generally not be recoverable under negligence. Such loss is of importance to many commercial and professional sectors, and the ability to distinguish between pure in-actionable economic loss, and actionable consequential economic loss, will be invaluable to answering problem questions in this area.

At the end of this section, you should be comfortable understanding that which counts as pure economic loss, and as such is generally not recoverable under tort. You will understand the three exceptions to this general rule, and be able to apply such exceptions to various scenarios that may arise. You should also have a good understanding of why the law operates to either include or exclude liability for various types of economic loss.

This section begins by defining pure economic loss, and the reasons why the law restricts the recovery of such loss. It then goes on to discuss the first of the exceptions to this general exclusion; economic loss due to physical damage. After discussing the operation of this exception, the next category is discussed; economic loss due to negligence causing a claimant to acquire defective goods or property. Finally, the third exception, economic loss due to negligent misstatement, is discussed with reference to the conditions required for a successful claim in this area.

Goals for this section:

  • To be able to define pure economic loss, and justifications for the restriction of its liability under negligence.
  • To understand which types of economic loss will be recoverable, as exceptions to the general rule, and why this is so.

Objectives for this section:

  • To understand why tort restricts economic claims under negligence.
  • To know the exceptions to the general exclusion of liability for pure economic loss.
  • To be able to establish when economic loss is directly linked to physical damage.
  • To understand when or why liability for economic loss resulting from defective goods or property may arise.
  • To understand the development of the law with regard to the recoverability of economic loss due to negligent misstatement.

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Problem Questions

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Hands on Examples



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