Pure economic loss

Economic loss is a term of art which refers to financial loss and damage suffered by a person which is seen only on a balance sheet and not as physical injury to person or property. There is a fundamental distinction between pure economic loss and consequential economic loss, as pure economic loss occurs independent of any physical damage to the person or property of the victim. It has also been suggested that this tort should be called "commercial loss" as injuries to person or property can be regarded as "economic". Examples of pure economic loss include the following: 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. Loss of market value of a property owing to the inadequate specifications of foundations by an architect. 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. Similar losses are also restricted in German law, though not in French law beyond the normal requirements that a claimant's asserted loss must be certain and directly caused. 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. In Australia, the general rule is that damages for economic loss which are not consequential upon damage to person or property are not recoverable in negligence even if the loss is foreseeable. Economic loss may be recoverable in cases where the plaintiff can prove an assumption of responsibility by the defendant and known reliance on the defendant by the plaintiff, or vulnerability in the sense of the inability of the plaintiff to take steps to protect itself from the risk of the loss.