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Pure economic loss: Wikis


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Economic loss refers to financial loss and damage suffered by a person such as can only be seen in balance sheets rather than physical injury to the person or destruction of property. Economic loss can be:

  • Consequential economic loss, arising from physical damage or injury, such as loss of earnings following an accident; or

Pure economic loss, from other circumstances.

Recovery at law for pure economic loss is restricted under some circumstances in some jurisdictions, in particular in tort in common law jurisdictions, for fear that it is potentially unlimited and could represent a "crushing liability" against which parties would find it impossible to insure.[1][2] U.S. Judge Benjamin N. Cardozo described it as, "liability in an indeterminate amount, for an indeterminate time, to an indeterminate class".[3]

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.[4]
  • Loss of market value of a property owing to the inadequate specifications of foundations by an architect.[5][6][7]
  • 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 English case of Spartan Steel and Alloys Ltd v. Martin & Co. Ltd[8] Similar losses are also restricted in German law[9] though not in French law beyond the normal requirements that a claimant's asserted loss must be certain and directly caused.[10]

By jurisdiction


  1. ^ Canadian National Railway Co. v. Norsk Pacific Steamship Co. [1992] 1 SCR 1021 (Canada), per McLachlan J
  2. ^ Bishop (1982)
  3. ^ Ultramares v. Touche 174 N.E 441, 444 (N.Y. 1931) (USA)
  4. ^ Baker v. Bolton (1808) 1 Camp 493 (England and Wales)
  5. ^ Murphy v. Brentwood District Council [1991] 1 AC 398 (England and Wales)
  6. ^ Sutherland Shire Council v. Heyman (1985) 60 ALR 1, at 60-61 (Australia)
  7. ^ Winnipeg Condominium Corporation No.36 v. Bird Construction Co. [1995] 1 SCR 85 (Canada)
  8. ^ [1973] QB 27
  9. ^ van Gerven (2001) pp187-188
  10. ^ van Gerven (2001) pp198-199


  • Bishop, W. (1982). "Economic loss in tort". Oxford Journal of Legal Studies 2: 1–29. doi:10.1093/ojls/2.1.1.  
  • Giliker, P. (2005). "Revisiting pure economic loss: lessons to be learnt from the Supreme Court of Canada?". Legal Studies 25: 49–71. doi:10.1111/j.1748-121X.2005.tb00270.x.  
  • Lunney, M. & Oliphant, K. (2003). Tort Law: Text and Materials (2nd ed.). Oxford: Oxford University Press. pp. pp 339–423. ISBN 0-19-926055-9.  
  • Stapleton, J. (1991). "Duty of care and economic loss: a wider agenda". Law Quarterly Review 107: 249.  
  • — (2002). "Pure economic loss: lessons from case-law-focused 'middle theory'". UCLA Law Review 50: 531.  
  • van Gerven, W. et al. (eds) (2001). Cases, Materials and Text on National, Supranational and International Tort Law. Oxford: Hart Publishing. ISBN 1841131393.  
  • Weinrib, E. J. (2005) "The disintegration of duty", in Madden, M. S. Exploring Tort Law, London: Cambridge University Press, pp143-272 ISBN 052185136X


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