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LAW FOR BUSINESS Assignment - Essay Example

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What is the distinction between consequential economic loss and pure economic loss in negligence? Answer: Pure economic loss is defined as a diminution of worth incurred without any physical injury to any asset of the plaintiff (A.G. Ont. V. Fatehi 1984 as quoted by Bowal and Peter, 2001)…
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LAW FOR BUSINESS Assignment
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This type of loss is mostly related with the economic benefits or profits of the claimant. Furthermore, the damages for pure economic losses are not recoverable in tort actions in the absence of the injury of personal nature and in the absence of personal property damage (Claim story, November 1998, p. 60, quoted as saying by Murphy and et. al, 1999). On the other hand, consequential economic loss is a type of economic loss that nearly or proximately results from the failure of the goods to work or function as warranted (Us legal).

The examples of consequential economic loss are loss of business reputation, loss of goodwill and other types of loss that are created from the use and consumption of defective products and so on. How does the “floodgates” principle constrain the right of claimants to claim damages for pure economic loss in negligence?  Answer: The concept of floodgate is that the court will only make the defendant responsible and liable when it is appropriate and reasonable to do so in the public interest (Corporate and Business Law, 2007/08).

Additionally, in order to satisfy the basic needs of this approach, some basic and fundamental conditions must be satisfied before going to use this approach for the purpose of claiming damages for pure economic loss in negligence. . The loss of profit, wasted expenditure, loss of gain and so on are the examples of pure economic loss. Floodgates principles can constrain the right of claimant for the purpose of claiming damages for pure economic loss in negligence. If the claimant is unable to satisfy the basic and fundamental requirements given in the floodgate test, and even if the claimant becomes successful in proving any of the steps given in the floodgate test, he or she cannot be able to receive damages since all the components of floodgate test are not fully and totally satisfied as they should be.

Donoghue v Stevenson (1932) Facts: Mrs Donoghue went to a cafe with a friend. She drank a bottle of ginger beer. She subsequently realised that there was a decomposed snail in the bottom of the opaque bottle. As a result, she suffered physical loss. She decided to sue the manufacturer, claiming that they were liable and under a duty to see such external and outside bodies did not get into the bottle of ginger beer. Held: There was a duty on the behalf of the manufacturer to take appropriate and reasonable care while manufacturing of these products.

The manufacturer is under an obligation and duty to the consumer to take appropriate and reasonable care to stop and prevent injury. ‘You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour’ (Lord Atkin as saying quoted by Corporate and Business Law, 2007/2008, pp.67). Negligence Negligence as a tort is a sort of breach of a legal duty to take care, which causes in damage to another (OUP). In order to satisfy the occurrence of negligence, three conditions must be satisfied.

Without satisfying these basic and fundamental conditions, the event or incident of

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