This document is notes from a Lecture on Limited Duty Situations. It oultlines, defines and explains this concept with the relevant Case Law to support each point.
Restrictions are placed on the duty of care in relation to certain kinds of harm:
• Pure economic loss
• Pure psychiatric harm
No damage to claimant’s property
An electricity company is carrying out work on a power cable which it owns. It carelessly
damages the cable and so causes a power cut to the claimant’s premises. The claimant is a
baker. The loss of power means that the baker cannot make and sell any bread for a week and
so suffers a substantial loss of money.
The baker has not suffered any damage to his property!
Case Law - Cattle v Stockton Waterworks [1875] - The plaintiff was under a contractual
obligation to build a tunnel for a landowner, Knight. The defendants were responsible for
negligently allowing a leak in the water supply which flooded the tunnel, delaying its completion
and causing the claimant loss of profit. This was held to be non-recoverable. This is what was
stated about the case:
“There is no pretence for saying that the defendants were malicious or had any intention to
injure anyone. They were at most guilty of a neglect of duty which occasioned injury to the
property of Knight but which did not injure any property of the plaintiff. The plaintiff’s claim is to
recover the damage which he has sustained by his contract with Knight becoming less
profitable, or, it may be losing a contract, in consequence of this injury to Knight’s property. We
think this does not give him any right of action”
Cattle v Stockton Waterworks is an early illustration of a finding of no duty owed to a plaintiff
who has suffered economic loss due to physical damage to the property of a third party
Defective Products
Duty of care for pure economic loss is excluded when it has been suffered as a result of
damage to property belonging to another or due to acquiring a defective product.
This can sometimes causes confusion (even to judges) because defective property (basically
the concern of contract law) can easily look like damaged property (for which there is a duty of
care in negligence).
(E.g) A baker buys a new bread oven from a catering supplier. After a few days, the oven
breaks down and needs expensive repairs. The catering supplier has gone out of business.
, The claimant wonders if it is possible to sue the original manufacturer of the oven, even though
the oven was not purchased directly from the manufacturer.
In this case the baker would sue the manufacturer for economic loss.
Shock induced injury
A delivery van is driven so carelessly that it crashes into the front of a shop. The shop owner is
working inside the shop and, as the van crashes through the window, reasonably fears that she
will be crushed. In fact, the van just stops in time and does not hit her. However, she is
pregnant, and the shock causes her to suffer a miscarriage.
How is this situation different from one in which someone witnesses a shocking event? For
example, compare this situation with the football stadium disaster in the media clip.
- They were in danger themselves
- They were a primary victim
Defining the harm
Pure Economic Loss:
- Loss where there is no physical damage e.g. loss of money on an investment
- Loss where the property damaged does not belong to the claimant
- Loss of value suffered where the claimant has acquired a defective product.
We need to differentiate between Pure Economic Loss and Consequential Economic Loss.
CSL is not a limited duty situation. It is e.g. someone breaking his leg and because of this
misses 4 weeks of wages.
Pure psychiatric Harm:
Psychiatric harm suffered without physical injury or impact:
- Psychiatric illnesses caused by shock – for example, post-traumatic stress disorder
- Physical illnesses caused by shock – for example, a miscarriage
Drawing the boundaries of liability:
Why do we have these special rules? Why are they limited?
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