Relational Economic Loss and Indeterminacy: The Search for Rational Limits

Abstract

This paper examines 10 possible 'limits' to liability in cases of negligently inflicted relational economic loss, testing their rationality from both the point of view of those 'pragmatists' (such as Professor Stapleton) who believe that such limits are required to target policy concerns about 'indeterminate liability'; and the contrasting points of view of those who believe that such limits can only be described deontologically as a derivation from conclusions about 'prior rights' (Professors Benson and Stevens). The debate takes place against the background of the recent Buncefield litigation in the United Kingdom - a jurisdiction in which rights to recovery for relational economic loss have historically been tightly described and where overwhelming emphasis has been placed upon the value of commercial certainty and the importance of 'bright lines' when deciding the ambit of liability for economic loss in negligence law.

I argue that the costs of the UK's restrictive approach in terms of rationality outweigh its benefits in terms of certainty, arguing that rationality is a value of a higher order in judicial decision-making than the value of certainty. These conclusions favour the imposition of a more flexible approach to the recovery of relational economic losses in the law of negligence, akin to some of those recently endorsed by the High Court of Australia. I also reject the view that any discussion of the limits of liability for such losses is greatly assisted by the 'prior rights' paradigm.

Keywords: Economic Loss, Tort, Negligence, Indeterminacy, Indeterminate Liability, Rights Theory, Buncefield, Colourquest