Principles of the law of Tort

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Principles of the law of Tort

Negligence

In order to understand the reasons behind the court's decisions regarding negligence involving pure economic loss we first need to know what negligence means. The tort of negligence can be broken down to three main points; is there is a legal duty of care owed by the defendant to the plaintiff? Is there a breach of that duty by the defendant? And finally the damaged suffered by the plaintiff, is it a result from that breach? The case of Donoghue v Stevenson [1932] gives a perfect description of duty of care including proximity and reasonably foreseeable i.e. the neighbour principle. The test for foresee ability is undemanding; it refers to the ability of the reasonable man in the position of the defendant to have foreseen the real possibility of harm occurring to the claimant. Another major factor in discussing this subject of negligence is negligent misstatements, a negligent misstatement can be defined as a representation of fact, carelessly made, which is relied on by the claimant to his disadvantage. Following the development of liability for negligent misstatement is complicated by the fact that many cases deal with the liability for pure economic loss. This doesn't come as a surprise as in most cases, only economic loss is suffered. I shall be exploring the above information in more detail in order to give a relevant and accurate discussion about the liability of negligent misstatements causing pure economic loss.

The main avenue of guidelines for liability for pure economic loss resulting from misstatements began from the case of Derry v Peek 1888 the usefulness of this tort is in the fact that the court relied upon actual proof of fraud rather than 'constructive fraud or neglect. The defendants in this case were found liable in the court of appeal however the decision was overturned by the House of Lords who said there had been no actual fraud in their conduct.
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"Fraud was held to consist in the making of a false representation '(1) Knowingly or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false" Statement from Lord Herschell

These are rules which are still used today when trying to distinguish between honest belief in a statement and deceit; this provides information on whether there is liability for negligent misstatements. It is important to distinguish the difference between negligent words and negligent acts, as through many years and many cases there has been a grey area covering the rules governing each. ...

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