The production process is interrupted and all the materials in process are damaged beyond repair. In addition, because there is no water supply for 24 hours Brian loses the opportunity to carry out several more processes and loses the profits that these would have generated.
An analysis of the facts of the case presents certain ambiguous legal issues within the premise of both common law as well as the law of torts. In the first situation, the issue is whether Derek's statement to Alan about the efficacy of the van, and the consequent economic loss to Brian, imposes a liability in tort on Derek and/or Alan. In the second situation, the issue is whether Brian can claim economic damages for the losses he has suffered in terms of equipment and material damage and by way of profit loss due to operations shut down resulting from Donald's negligent action.
The first situation --Brian v. Derek/Alan - relating to Brian's purchase of van prima facie pertains to area of 'pure' economic loss due to negligent misstatement, resulting in tortious liability under common law.1 The second situation --Brian v. ...
A. Brian v. Derek/Alan - Negligent Misstatement Resulting in Economic Loss
The common law imposes liability in tort upon persons who make misstatements to others; however, only if the misstatement is made fraudulently or negligently, when there is a duty to take care. Also, the claimant/the person to whom the misstatement has been made must have sustained a loss (which may be physical or financial or both) as a result of reliance upon the misstatement. Thus, liability in the tort of negligent misstatement is generally defined in terms of the common law premises of duty, breach and damage,3 however, a "special treatment" is usually given considering the complexity and since tortious liability in this area is a relatively recent development.4
The case in question presents considerable issues in facts and in law, an analysis of which in relation may be vital in advising Brian. The primary issues for consideration include:
Whether mistakes were fraudulent or arising out of negligence
Whether Derek owes a duty of care to Brian for a report he made to Alan
Whether the plaintiff sustained loss, economic or physical
Whether Alan has a vicarious or personal liability in relation to Derek's misstatement and/or in passing the report to Brian
Any defence, legal or factual, which may be claimed by Derek/Alan against Brian
As the facts of the case reveal, there is no apparent evidence of fraud -- Derek cannot be said to have any interest in Alan or Brian purchasing a van that has been advertised in the local newspaper. The mistakes in the report are mainly due to negligence; however, relying on that Brian, a third party had sustained financial loss,