Pure Economic Loss and Negligent Misstatement 1
Pure Economic Loss and Negligent Misstatement 1
Pure Economic Loss and Negligent Misstatement 1
DEFINITIONS
For example, if the plaintiffs factory is damaged due to the negligence of the defendant, ordinary tort law would compensate him to repair his factory while the extra profit he would have earned during the period of repair is an item of pure economic loss.
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DEFINITIONS
The tort of negligent misstatement was not founded until 1964. Prior to this claimants had to rely on the law of contract or alternatively use the tort of deceit. Deceit is based on a fraudulent factual misrepresentation, whereas negligent misstatement covers opinions and factual statements made through negligence.
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NEGLIGENT MISSTATEMENT
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DEFINITIONS
In the case of Candler v Crane Christmas & Co (1951) 2 KB 164, it was established that any duty of care owed on behalf of the accountants who were negligent in giving advice whilst preparing accounts for the claimants, would give rise to an action under the law of contract rather than tort. The first major development in this area of law came in 1964 with Hedley Byrne redefining the duty of care principle.
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A Special Relationship
Hedley Byrnes case Mutual Life and Citizens Assurance Co Ltd v Evatt [1971] AC 793 Esso Petroleum v Mardon [1976]
It was reasonable for the claimant to The defendant knew the identity of the claimant a special relationship was established rely on the misstatement
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RECENT DEVELOPMENT
In Commissioners of Customs and Excise v Barclays Bank [2006] 4 All ER 256, the House of Lords recognised that in order for a claim for pure economic loss to succeed, there are three approaches/ useful guidelines to decide whether the defendant owes a duty of care to the plaintiff.
Assumption of responsibility test as stated in Hedley Byrne. The 3-fold test of foreseeability, proximity and fair, just and reasonable The incremental test
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RECENT DEVELOPMENT
The Commissioners of Customs and Excises case has been cited in the case of KGV & Associates Sdn. Bhd. v The Cooperative Central Bank Ltd [2006] 5 MLJ 513 where the Court of Appeal said that the ultimate question whether a duty of care should be in a particular case is essentially fact sensitive.
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RECENT DEVELOPMENT
It must be submitted that the departure from English Law is perhaps completed with these two recent judgments in the cases of:
Majlis Perbandaran Ampang Jaya v Steven Phoa Cheng Loon & Ors (2006) 2 AMR 563, FC Lim Teck Kong v Dr. Abdul Hamid Abdul Rashid & Anor [2006] 2 AMR 108
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