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Tort Problem Introduction It is established law that recovery for pure economic loss is possible if it is caused by a careless statement. This was established in the case of Hedley Byrne & Co Ltd v Heller and Partners Ltd1, so that those in the business of giving skilled advice may be liable for any economic loss suffered from giving careless information. Limits on the circumstances in which a person is held to have a duty of care were laid out to prevent "floodgates" of claims. It is these qualifications which we must focus on to ascertain whether there are possible claims in negligence for both Stout and Nice. Staff and Stout Initially there must be a "special relationship" or proximity between the parties, using a "special skill" by the defendant. In this case, Staff gives specialist advice to Stout with regards to a house he is buying in his capacity as a professional surveyor. This would be regarded as fulfilling the requirement for proximity set out in Hedley Byrne, however, in Caparo Industries plc v Dickman2, further limits were placed on proximity to restrict the number of people eligible to claim. The defendant must know that the statement would be communicated to the claimant as an individual, which in this case is true for Staff and Stout, as Staff passes on the report to Stout himself. ...read more.
There are, however, some exceptions to this. If it can be proved that the agreement had a business connection, and wasn't purely social, then a duty of care may be owed. This concept protects individuals from following advice which has been given in a social context and turns out to be false. This was established in Chaudhury v Prabhaker4. In our case, there was also a business connection, as the surveyor was asked to do a specific job for a specific purpose - to provide a report on both houses so that Stout could decide which to buy. It was not simply some offhand advice being given - Staff had to physically inspect the properties and type a written report on each one. This qualifies as being a business connection, as it is going further than simply giving advice. It can therefore be seen that Stout would have a claim against Staff in negligence. If it was decided that Staff didn't act negligently, claims with regards to the purchasing of negligent property are treated as pure economic loss. The only loss which is suffered is paying too much for something. As it is a structural defect with the property, the "complex structure" theory doesn't apply. ...read more.
After the error has been corrected, it is not reasonable to blame their inability to sell on the report - it could be for a number of other reasons. However, one would deduce that it seems more likely that there is no proximity between the parties, as there are more persuasive factors which weigh against it than for it. Conclusion In conclusion, Stout would be most likely to have a claim in negligence on the information given, as it fulfils the requirements for proximity, reasonableness, reliance, and responsibility. Although there is a question over the context in which the information was given, it seems to be clear that although the men were friends, there was a business connection between them - Staff surveyed the house as he would if he were employed to do so, making it reasonable to expect it to be done to the same professional standard. Nice is a 3rd party, and so therefore there is no proximity between the parties, and he doesn't act on the information given to his detriment, so Staff therefore owes Nice no duty of care. Some may argue that there is sufficient proximity, although this argument is weak and unconvincing, and it would be most likely that Nice would not have a claim in negligence. ...read more.
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