Economic Loss Tort Essay

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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).

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.

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".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.Up until Hedley Byrne was decided, pure economic loss was thought to be entirely within the realm of contract law.From that point on, in jurisdictions following the English common law, it has been possible to recover for some pure economic loss in negligence; however, because purely economic loss can usually be anticipated and allocated differently by contract, the party seeking to be compensated for such loss must demonstrate a compelling reason to change the contractual allocation through tort liability.However, La Forest J, writing for a unanimous court, declined to impose liability on the auditors for policy reasons, citing Justice Cardozo's concerns over indeterminate liability.Pure economic loss was not recoverable in negligence until 1963 and the decision of the House of Lords in Hedley Byrne & Co Ltd v Heller & Partners Ltd (1964).'Pure economic loss covers a wide variety of legal problems that are not dealt with in a homogenous way in the various legal systems.In some cases the defendant's negligence will cause no physical damage or injury to the plaintiff or their property, but the...We use cookies to make interactions with our website easy and meaningful, to better understand the use of our services, and to tailor advertising.For further information, including about cookie settings, please read our Cookie Policy .

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