When are pure economic losses recoverable in tort?

• A. Always recoverable.
• B. Never recoverable.
• C. Generally not recoverable unless part of a special duty, such as negligent misstatement or where there is a duty of care for pure economic loss in specific circumstances.
• D. Only when caused by physical injury.

Answer: (C)

Pure economic loss means financial harm that isn’t tied to any physical damage to a person or property. In tort, such losses are normally not recoverable to avoid opening the floodgates of liability for every minor or uncertain financial consequence. The only times they can be recovered are when there’s a recognised duty of care related to the pure economic loss. The most familiar example is negligent misstatement: if someone has assumed responsibility for a statement or advice, and the claimant reasonably relies on it to their detriment, the misstatement can give rise to a duty of care and allow recovery for the pure economic loss involved. This reflects the idea that where a party is in a special relationship and has information or expertise the other party relies on, there should be accountability for inaccurate or misleading information. There can also be other specific circumstances where a duty of care for pure economic loss exists, such as certain professional relationships or statutory contexts. So the correct view is that pure economic losses are generally not recoverable, except where such a special duty of care applies, notably in negligent misstatement or other narrowly defined circumstances.