- economic loss
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There are legal rules, which restrict recovery of compensation for financial loss which arises without intervening physical damage or personal injury where the only loss is economic.
Easyform Glossary of Law Terms. — UK law terms.
- economic loss
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in the law of tort or delict, certain claims for non-physical or non-proprietary damage caused negligently. Certain claims, although financial, are usually discounted from such discussion, viz. loss of wages consequent upon physical injury and loss of use following damage to property. The phrase then encompasses other cases where the plaintiff is suing because he has less money than he had before the events complained of. There are, however, two kinds of cases that can be considered under this head, and they must be distinguished. There are primary claims, where the loss to the plaintiff has come directly and without any intervening damage to the person or property of another. Thus, negligent financial or legal advice causes such loss. Other cases are secondary: the plaintiff is poorer but only as a result of the defendant having harmed the person or property of another person, as where the defendant cuts an electricity company's cable but the plaintiff who operates an amusement arcade is poorer as a result. Cases of primary economic loss have the potential to be successful, whereas secondary cases are most likely to fail. Primary cases are governed by the principle in Hedley Byrne v. Heller [1964] AC 465, based on assumption of responsibility for the potential loss. Secondary cases are governed by a long line of authority disallowing recovery based upon contractual and other relations to the primarily injured party. There are exceptions to the non-recovery rule in secondary cases, and that is where the plaintiff has some possessory title like lien or hypothec; in these cases he may sue: see Leigh and Sillivan v . Aliakmon Shipping [1986] AC 785. There are some odder cases that have been allowed, notably White v . Jones [1995] 2 AC 207, in which solicitors were held liable to a disappointed beneficiary when the solicitors failed to give effect to the testator's intentions. The case is unusual because the estate had not been lost when the matter is looked at all round – it went to the wrong person.
Collins dictionary of law. W. J. Stewart. 2001.
