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What Is Pure Economic Loss Notes

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What is Pure Economic Loss?
Definition

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Giliker: where loss is purely financial Consequential losses are not pure economic loss
? e.g. X suffers a facial injury owing to D negligently running him over with a car
? X is a model
? X now loses contracts and future contracts

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This is not economic loss because it is a consequence extending from the personal injury Only when Z suffers purely financial loss is this pure economic loss in law:
? Suppose X is contracted the his agent Z
? Z can no longer get money from X's work, because X cannot work anymore
? Z has suffered no personal injury nor property damage

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She has suffered a purely financial loss o Her pocket has been hit
? But nothing else has Spartan Steel v Martin and Co [1973]: D was a construction company near to SS's factory, which was supplied by an electricity cable. D negligently severed that cable by not taking enough care, meaning the factory had to close.
? The melt already in the furnace suffered damage

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SS was allowed to claim for this loss AND the lost profits from the damaged melt
? BUT factory had had to close down for 14 hours

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Meaning 5 other melts could not be melted down

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Thus, SS suffered lost orders from those 5 melts they could not melt down during the "down time". Lord Denning: SS can recover lost melt, but not the 5 others that weren't damaged
? Should be no liability for lost profits and PEL because

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Nature of hazard o Loads of people suffer loss owing to things beyond their control - go and get on with it

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Floodgates - desire to avoid crushing liability o Used to stop loads of claims happening o If claims for economic loss allowed for power shutdown, would be no end of claims
? And no end of damages o Would be wasteful to investigate whether the claims were real or not

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Risk of economic loss should be borne by whole community

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Law provides for deserving cases where property damage occurred Problems with the Denning Approach:
? Hoyano:

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PEL can be just as devastating to people as property damage

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