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The case of Spartan Steel v Martin (1972 All ER 557) illustrates that the distinction between pure economic loss and other kinds of loss can be a very fine one and one that is difficult to justify. (Elliott & Quinn: Tort Law, 2003). With reference to case law, critically assess the extent to which this statement is true of the tort of negligence.

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Introduction

The case of Spartan Steel v Martin (1972 All ER 557) illustrates that the distinction between pure economic loss and other kinds of loss can be a very fine one ? and one that is difficult to justify. (Elliott & Quinn: Tort Law, 2003). With reference to case law, critically assess the extent to which this statement is true of the tort of negligence. Negligence concerns falling under a legal duty to take care which causes harm to the claimant. It protects against 3 types of harm which is physical injury, damage to property and economic loss. For a claim in negligence to succeed, 3 elements must be proved; there must be a duty of care owed, a breach of that duty and damage done to the claimant. The difference between pure economic loss and other losses can be a very fine one. However this can be illustrated in the case of Spartan Steel v Martin. ...read more.

Middle

The third party suffered losses due to the bad advice given, and sued the defendant. It was held that the defendant did not owe a duty of care to them, merely to the contractual party they were with. The reason behind this is because the courts wanted to prevent a floodgate of litigation. While as a general rule, an act or omission can cause personal injury and damage to property to a limited amount of people, the possible economic loss from the same act may be vast and indeterminate. Similarly, the law of contract is seen as a way that economic loss is compensated, the law is reluctant to disturb this. Contract was seen as offering certainty, defendants would only be liable for their own failure to fulfill a freely undertaken agreement and this clearly had benefits in the commercial world. However this may cause great hardship to the claimants who are left without a remedy, eemingly as there was no moral reason not to compensate such losses. ...read more.

Conclusion

This was further expanded in Junior Books v Veitchi, where the claimants requested a special type of floor to be built in their factory. It was found to be defective, and was compensated. The situation after this was that the claimants could recover for economic loss caused by statements and following Ann?s and Junior Books, they could also recover for pure economic loss arising from negligent acts. However this has faced much criticism and the courts began to drawback. Murphy?s case overulled Ann?s case . The House of Lords put a stop to the possibility that defects in products can be seen as damage to property, economic loss could not thus be compensated in negligence. The position of pure economic loss may be unjust to the claimant. In the case of Spartan Steel v Martin, the defendant?s act had caused all three types of losses and those three types were easily forseeable, so why should the defendant not be liable for the third loss? The claimant is left with a loss has no redress unless they have a contract. This allows defendants to get away with seriously careless behavior. ...read more.

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