• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

'Judges have been reluctant to allow economic losses to be claimed for in negligence, and have been careful to restrict the circumstances where such claims will be permitted' - Critically assess this statement.

Extracts from this document...

Introduction

Lancaster University BA (Hons) Accounting & Finance Year 2- 2002/2003 Law 231 Assignment Assignment Title 'Judges have been reluctant to allow economic losses to be claimed for in negligence, and have been careful to restrict the circumstances where such claims will be permitted' Critically assess this statement with reference to the development of liability for economic loss in negligence. Support and illustrate your answer with reference to relevant case law and academic opinion. Introduction In this essay, I am going to discuss whether economic loss in negligence should constitute a cause of action. I will discuss this in three sections. First of all, I will explain briefly what the tort of negligence is and the development of the related law. Second of all, I will explain what the law relating to the recovery of economic losses is and what types of economic loss might be claimed under negligence. Final, I will bring forward my points of view on whether there is a duty to avoid causing foreseeable economic loss. The tort of negligence is where someone's carelessness, therefore, failure to exercise the degree of care considered reasonable under their circumstances, resulting in an unintended injury to another party. In a normal tort case involving a claim of negligence, the claimant must prove three things. ...read more.

Middle

2. Physical injury. Damages for economic loss may be awarded if there is foreseeable physical injury to the claimant or his property. In Spartan Steel and Alloys Ltd v Martin & Co Ltd [1972] 3 ALL ER 557, while digging up a road, the defendants' employees damaged a cable which the defendants knew supplied the claimants' factory. The cable belonged to the local electricity board and the resulting electrical power failure meant that the claimants' factory was deprived of electricity. The temperature of their furnace dropped and so metal that was in melt had to be poured away. Furthermore, while the cable was being repaired the factory received no electricity so it was unable to function for 14 hours. The Count of Appeal allowed only the claimants' damages for the spoilt metal and the loss of profit on one 'melt', due to the fact that the loss of profit on this 'melt' had closed relationship with damages of the spoilt metal. On the other hand, the Court of Appeal refused to allow the claimants to recover their loss of profit which resulted from the factory being unable to function during the period when there was no electricity because it was too remote to be a head of damage, not because there was no duty owed to claimant or because the loss suffered in this case was not caused by the negligence of defendants. ...read more.

Conclusion

i.e. an economic loss which is only connected with physical damage to the claimants' persons or property can be recovered (It has the different situation with Negligent misstatements). If the answer is no, it will cause that an unfair situation to take place. A lot of claimants will ask why only Junior Books can recover the economic loss. Conclusion In my points of view, I totally agree that there must be a duty to avoid causing foreseeable economic loss; judges should allow economic losses to be claimed for in negligence. However, we must carefully restrict the circumstances where such claims for economic loss. First, the courts could only award damages for pure economic loss in the area of careless or negligent misstatement. Second, in other situations, the claimants can only recover economic loss when the economic loss is connected with physical damage to the claimants' persons or property. The courts should restrict the application of Junior Books as precedent because judges do not limit the award of damages to this kind of circumstance. It is possible to use the law of contract to deal with the third-party claims under the Contract Act 1999. There is no problem about recovering economic loss in contract claims. Although my opinion may be criticised for its rigidity and its restrictions for the proper development of law in this area, I do believe that it can ensure the consistency of the law of torts. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Accounting section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Accounting essays

  1. When a company is registered one of the clauses in their memorandum is an ...

    Those things that are authorised ..." (handout of company law). The object clause restricts companies to enter into contracts outside. There is a difference between the object of the company and the power to carry out the object. This was raised in the case of Cotman v Brougham (1918)

  2. Cariboo Case

    The cash flow from investing was alarmingly high in year 2002. Huge amount land purchased in 2002 and 2003 resulted in the cash outflow in investing activities. However, the investment was not a wise one as the price paid for land was above the valuation.

  1. Financial statement analysis

    The general strength of the economy can be attributed to strong consumer confidence which is at its highest level in a decade and strong consumer spending which has been bolstered by tax cuts, benefit payments and low interest rates. The economy is benefiting from a stronger global economy.2 According to

  2. Two-page report if an aggressive takeover should occur on BHP Billiton Ltd

    It is therefore highly recommended to take over the BHP Group, as given the fact that BHP meets the future demand of mining resources, and hold a bigger portion of pie throughout the world as compared to its remainder competitor.

  1. Two-page report if an aggressive takeover should occur on Fortescue Metals Group Ltd (FMG)

    Annual reports and financial statements were used for analysis. In addition, current news reports and articles were taken into consideration when deciding the recommendation. This report looks into the world mining economy as well Australia mining economy; the mining industries of Australia, Brazil, India and China; global competitors to Australia and area competitors to FMG, and performance of FMG itself.

  2. Value Chains Versus Supply Chains

    Daarbij is gekeken naar de ontwikkeling die de Amsterdamse economie ´┐Żn de zes belangrijkste economische pijlers van de locale economie afzonderlijk, hebben doorgemaakt in deze bestuursperiode (hoofdstuk 2). Het uitgangspunt voor deze evaluatie is de SWOT-analyse die vier jaar geleden aan de opstelling van Hermez ten grondslag heeft gelegen (zie bijlage).

  1. Accounting has being blamed for the losses suffered by investors as a result of ...

    Akhigbe et al. (2005, p.5-6) argues that Enron's bankruptcy and collapse lead to two possibilities. Firstly of a negative reaction for the energy sector shares generally, but that it also could lead to an increase of the share price in this sector, at least in part, by increased demand as investors' trade out of Enron.

  2. Auditing Assignment

    He has been the engagement partner since then. (c) Following an unfavourable staff appraisal , Philip himself had arranged for the member of staff concerned, John Tristam, to be offered the newly created post of company accountant with a client company, Maltby Manufacturing Limited.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work