ExpertHard2 marksMultiple Choice
ACCA · Question 09 · Corporate and Business Law
In the tort of negligence, what is the general rule regarding recovery for pure economic loss?
In the tort of negligence, what is the general rule regarding recovery for pure economic loss?
Answer options:
A.
It is always recoverable if it was reasonably foreseeable.
B.
It is generally not recoverable unless it arises from a negligent misstatement.
C.
It is only recoverable if physical injury also occurred.
D.
It is never recoverable under any circumstances.
How to approach this question
Recall the rule from Spartan Steel and the exception from Hedley Byrne.
Full Answer
B.It is generally not recoverable unless it arises from a negligent misstatement.✓ Correct
Pure economic loss (financial loss not stemming from physical injury or property damage) is generally unrecoverable in tort to prevent 'floodgates' of litigation. The main exception is negligent misstatement where a special relationship exists (Hedley Byrne v Heller).
Common mistakes
Confusing pure economic loss with consequential economic loss (like lost wages due to a broken leg).
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