Economic Loss and the Duty of Care: A Study in the Exercise of Legal Justification

Abstract

The confusion currently rife in courts' approach to duty of care issues in cases of pure economic loss is attributable to two different types of difficulty. One well-documented problem lies in identifying clear, relevant, justifications for taking a restrictive approach to recovery. The other relates to the inherent methodological difficulty of incorporating them into legal rules and principles in a way which is sensitive to (a) their individual justificatory force (b) the structural constraints of private litigation (c) the need for transparency in legal reasoning and (d) the need to accommodate 'new cases' lying outside existing categories and precedents. The negative form and multiple nature of the various judicial concerns, the (apparently) social orientation of some of them and the fact that they disclose arguments of different normative orders all create problems for the substance and form of legal reasoning. English and Australian courts currently tackle these methodological problems in subtly different ways - the former by deploying high-level, abstract principles and the latter through a lower-level 'multifactoral' approach. The ideal, it is argued, lies between the two, in the combination of higher-level principles with lower-level rules. The coherence of the duty inquiry can also be increased markedly by abandoning a number of normatively suspect concerns and redeploying others (such as ideas about alternative means of protection) elsewhere in the negligence inquiry, where more sensitive weighting can be given to their normative force. This leaves two dominant concerns relevant to the duty question - the need to respect the rights of private parties to engage in legitimate economic competition and the need, in developing the law of negligence, to avoid conflicts with other ways in which such interests are ordered and protected.

Keywords: Negligence, Duty of Care, Economic Loss