Recovery for pure economic loss in English law, arising from negligence, has traditionally been limited. Notably, recovery for losses that are "purely economic" arise under the Fatal Accidents Act 1976; and for negligent misstatements, as stated in Hedley Byrne v. Heller. Economic loss generally refers to financial detriment that can be seen on a balance sheet but not physically. Economic loss is then divided into "consequential economic loss" - that which arises directly from some physical damage or injury (e.g. loss of earnings from having your arm cut off) and "pure economic loss", which is everything else.

The fear behind allowing claims for "pure economic loss" is that potentially unlimited claims could flood in. The risks may be unknowable, and parties would find it impossible to insure.Canadian National Railway Co. v. Norsk Pacific Steamship Co. 1 SCR 1021 (Canada), per McLachlan JBishop (1982) The U.S. judge Benjamin N. Cardozo famously described it as, "liability in an indeterminate amount, for an indeterminate time, to an indeterminate class".Ultramares v. Touche 174 N.E 441, 444 (N.Y. 1931) (USA)

Examples of pure economic loss include: Loss of income suffered by a family whose principal earner dies in an accident. The physical injury is caused to the deceased, not the family.Baker v. Bolton (1808) 1 Camp 493 (England and Wales) Loss of market value of a property owing to the inadequate specifications of foundations by an architect.Murphy v. Brentwood District Council 1 AC 398 (England and Wales)Sutherland Shire Council v. Heyman (1985) 60 ALR 1, at 60-61 (Australia)Winnipeg Condominium Corporation No.36 v. Bird Construction Co. 1 SCR 85 (Canada) Loss of production suffered by an enterprise whose electricity supply is interrupted by a contractor excavating a public utility.

The latter case is exemplified by the case of Spartan Steel and Alloys Ltd v. Martin & Co. Ltd. QB 27 Similar losses are also restricted in German lawvan Gerven (2001) pp187-188 though not in French law.van Gerven (2001) pp198-199

Complex structure theory

The complex structure theory is an argument which has been put forward in pure economic loss cases which suggests that a large chattel may be considered to consist of several parts and so damage to other "property" for the purpose of applying Donoghue v Stevenson principles. This theory as a normative doctrine has been rejected by Lord Bridge in Murphy v Brentwood.Murphy Respondent v Brentwood District Council Appellants 3 W.L.R. 414 p. 478H. G. Beale, W. D. Bishop, Michael Philip Furmston, Contract, p34

Key cases Donoghue v Stevenson Anns v Merton London Borough Council Caparo Industries plc v Dickman Murphy v Brentwood District Council Hedley Byrne & Co Ltd v Heller & Partners Ltd Smith v Eric S Bush White v Jones Henderson v Merrett Syndicates Ltd Spartan Steel & Alloys Ltd v Martin & Co (Contractors) Ltd Junior Books v Veitchi D & F Estates Ltd v Church Commissioners for England Deloitte & Touche v Livent Inc (Receiver of) (Canadian case)

References

Bibliography

Weinrib, E. J. (2005) "The disintegration of duty", in Madden, M. S. Exploring Tort Law, London: Cambridge University Press, pp143-272