LAW2105/LAW3205: Analyzing Economic Loss Liability in Negligence

This essay delves into the concept of liability for economic loss in negligence cases, using relevant case law to illustrate key principles. It discusses the emergence of liability, focusing on product liability, design defects, manufacturing defects, and marketing defects, referencing the Junior Books Ltd v Veitchi Co Ltd case. The essay further examines the types of damages that can be claimed, differentiating between special, general, and punitive damages, and applies these concepts to a scenario involving Builder Ben and Peter, a kitchen fitter. Finally, it addresses the vicarious liability of employers for the negligent acts of their employees, referencing the Ponticas v. K.M.S. Investments case. The report concludes by summarizing the importance of case law in determining negligence and liability. Desklib provides a platform for students to access similar solved assignments and past papers for effective learning.

LIABILITY FOR
ECONOMIC LOSS ARISES
IN NEGLIGENCE CASES
USING CASE LAW TO
ILLUSTRATE YOUR
ANSWER

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
1. Emergence of liability in case of negligence through the illustration of case law..................3
2. Damages that can be claimed in case of negligence of Peter..................................................4
3. Liability of whom for Peter’s negligence, if he was working for Kitchen – Quick Kitchen
fitters............................................................................................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Tort can be defined as a civil wrong which results in claim from a plaintiff due to
suffering from a harm or loss which in return creates liability in legal sense for another person
against whom the claim has been made by the plaintiff for their tortious act. It includes financial
losses, emotional distress, negligence, invasion of privacy and injuries along with many other
things. The person committing the tortious act is known as tortfeasor and the plaintiff in this
regard is known as injured party. In this report, the main discussion will revolve around the
emergence of liability in the cases of negligence and damages that an injured party can claim due
to the commitment of negligence along with the person on whom liability will be imposed in
such negligence case.
MAIN BODY
1. Emergence of liability in case of negligence through the illustration of case law
In case of negligence, the tort involve is of an unintentional nature, where a lack of action results
in the personal damage and injury. Here the tortfeasor can claim in the law of court that he has
acted unreasonably by disregarding the well – being and safety of the other party. Therefore, the
tortfeasor is liable towards the injured party under the law of tort. The certain liability discussed
under the tort law pertaining to negligence are as follows:
 Product liability: Liability arise of any or all those involved in the chain of
manufacturing of certain product which leads to the damages caused to the party
obtaining it1. Claim can be made in respect of product liability when there is a
negligence, strict liability as defined under the tort law and also when there is a breach of
warranty.
 The events in which product liability arises are as follows:
 When defendant undertake to sale product or service to the plaintiff and the latter
has made payment in this regards.
 The defendant should be a commercial seller of the product.
 The plaintiff should suffered from an economic loss.
 The item should be defective at the time it was sold.
 The proximate and actual cause of the economic loss should be one resulting from
that defect which was present at the time of sale.
 The liability arises when the loss was resulting from the product and it could
never be a pure economic on nature but only the monetary losses arises due to the
sale of the product.
 Defects due to which liability arises are as follows:
 Design defects: Such type of defects are considered to be an inherent and it was
existed before the product was actually manufactured2. Due to the flaw of the
design, it could be unreasonably harmful or dangerous to use despite of the fact
that it is serving the purpose well.
1 Abbasi, M. and Parsa, E., 2019
2 Basten, J., 2018

 Manufacturing defects: Such defects occurs during the process of production
where not all but few items out of the many products produced are defective in
this case.
 Marketing defects: Such type of defects arises when the marketing function
couldn’t release proper instructions and thus fails to warn consumers of the
hidden dangers associated with the product.
Illustration of Tort law for negligence
In the case of Junior Books Ltd v Veitchi Co Ltd [1983] where the defendant was specialist and
contractor for laying a floor in a factory which was used by the plaintiff. The latter claims that
the defendant was specialist and due to his negligence whatever the damages has been caused
with the cracking of the floor, the defendant is liable for it. Therefore, plaintiff has claimed the
cost associated with the laying of floor, the cost incurred to the factory towards replacing the
floor and also the loss of profit. There was no claim personal injury due to the cracked floor. As
a result, the defendant appealed for such claims made by the plaintiff3. Held, the court set aside
the appeal of the defendant on the ground of extended duty to not avoid only the foreseeable
harm to the property or person but also due to the work that had been defected there is a duty to
avoid pure economic loss arises. Hence, plaintiff has the right to recover the cost associated with
the repair of the floor.
2. Damages that can be claimed in case of negligence of Peter
In the context of law, damages are defined as an award generally in terms of money that is
required to be paid to the person as a compensation for the injury or loss caused to the plaintiff.
The damages are categorized into two categories that is, punitive and compensatory damages.
The further classification of compensatory damages is special and general damages.
Special damages involves loss of economic nature that is, loss of earnings, damages to property
and medical expenses while general damages involves non – economic losses such as emotional
distress and pain and sufferings4. Punitive damages are those which results in deterring the
defendant from pursuing a particular course of action due to which damage has been caused to
the plaintiff.
So, on the basis of above discussion the damages that can be claimed by Builder Ben due to the
negligence of Peter are as follows:
 The present case involves two types of damages that arises in the contract between Peter
and Builder that is, the damage to property as kitchen units wooden floors in the hall and
living room gets damaged due to the water flooded in these with the negligence of Peter
and the second damage involves the loss of earnings as Builder Ben has received lower
monetary gain by selling the house to other party as Mark has denied to buy that house
due the non – completion of work on time. As per the law of tort, both cost of repairing
incurred by Builder Ben and loss of earnings in respect of lower value received from the
sale of house can be claimed from Peter which has been caused due to his negligence.
3 Stoyanova, V., 2020
4 Pal, M., 2019

3. Liability of whom for Peter’s negligence, if he was working for Kitchen – Quick Kitchen
fitters
If Peter was working for Kitchen-quick kitchen fitters, then the latter was acting as an employer
and Peter was then considered to be an employee of the latter. Under tort law, an employer is
held liable for the act of negligence of an employee, when the employer was found to be
negligent in providing with the ability to perform a particular act to his employee5. Some of the
cases of employer’s liability are negligent hiring and retention & negligent training and
supervision. However, if it found that the employee is negligent on his personal part like if he
has behaved in a reckless manner, then he would be liable for the loss and damages personally.
Illustration of case law
In case of Ponticas v. K.M.S. Investments, the court held employer liable on the ground of
negligent employment. Thus, it is the direct liability imposed by court on the employer after
holding that the loss or damages caused to the plaintiff was due to the failure of employer in
taking reasonable precautions while hiring and retaining employees in the business in an attempt
to protect their customers from the misconduct of its employees.
CONCLUSION
From the above report it has been concluded that tort law are some of the decision that
has been made by the court previously in the similar circumstances as is in the present. And on
the basis of such cases, the judgment for the present cases are made. In this report various case
laws associated with the negligence has been discussed.
5 Goudkamp, J., 2017

REFERENCES
Abbasi, M. and Parsa, E., 2019. Types of compensation claims in relation to pre-natal diagnosis
negligence in the UK legal system. Journal of Advanced Pharmacy Education &
Research| Apr-Jun, 9(S2), p.79.
Basten, J., 2018. Personal injury: contributory negligence. JUDICIAL REVIEW, 13(4), pp.417-
430.
Stoyanova, V., 2020. Common law tort of negligence as a tool for deconstructing positive
obligations under the European convention on human rights. The International Journal of
Human Rights, 24(5), pp.632-655.
Pal, M., 2019. Economic Analysis of Tort Law: The Negligence Determination. Taylor &
Francis.
Goudkamp, J., 2017. Breach of Duty: A Disappearing Element of the Action in
Negligence?. The Cambridge Law Journal, 76(3), pp.480-483.