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Liability for Pure Economic Loss in English and Swedish Law of Tort - a comparative analysis with special regard to problems concerning misrepresentation in non-contractual relations

Wredström, Linn (2004)
Department of Law
Abstract
According to Chapter 2 Section 2 of the Swedish Tort Liability Act, pure economic loss arising in non-contractual relations shall be compensated if the tortfeasor has caused the loss through the commission of a crime. Although never intended, until recently, the general view was that in the absence of legislation, damages could only be awarded for pure economic loss outside contractual relations if suffered in connection with a crime. Through a string of cases starting with the landmark decision in NJA 1987, p. 692 (the so called Kone case), the traditional Swedish restrictive view on pure economic loss seems to have given way for a more flexible approach where circumstances in the specific case and the need for awarding compensation are... (More)
According to Chapter 2 Section 2 of the Swedish Tort Liability Act, pure economic loss arising in non-contractual relations shall be compensated if the tortfeasor has caused the loss through the commission of a crime. Although never intended, until recently, the general view was that in the absence of legislation, damages could only be awarded for pure economic loss outside contractual relations if suffered in connection with a crime. Through a string of cases starting with the landmark decision in NJA 1987, p. 692 (the so called Kone case), the traditional Swedish restrictive view on pure economic loss seems to have given way for a more flexible approach where circumstances in the specific case and the need for awarding compensation are now taken into account. The basis for this expansion of liability is that liability can arise in non-contractual relations if the third party is found to have had a justifiable reason to place his trust in the act of the tortfeasor and the latter has or ought to have realised that the loss could occur as a result of the tortious act. By using this ''justifiable reliance'' principle which was laid down in Kone, the Swedish Supreme Court has concluded that professionals may be liable for losses suffered by others than their contractual parties even if no crime has been committed. This general principle seems to be in well harmony with the English principle on recovery for pure economic loss in respect of professional negligent misstatements, advice and performance of services as enunciated by the House of Lords in the case of Hedley Byrne &amp&semic Co v Heller &amp&semic Partners in 1963 and as extended under Henderson v Merrett Syndicates Ltd. Liability will be imposed where a ''special relationship'' arises between the parties. Such a relationship will arise if the claimant has placed ''reasonable reliance'' on the defendant's special skill and care and the defendant has made a ''voluntary assumption of responsibility'' for the statement or service given. One of the purposes of the present study is to account for some of the differences and similarities in the approach on this issue in the English and Swedish legal systems. The study has been carried out within a case oriented comparative methodology, in order to provide a picture of how Sweden and England deal with the problem of pure economic loss compared with each other. The present work is in part descriptive and in part analytical. Chapters Two through Five provide a general presentation of the two legal systems as well as a presentation of liability for pure economic loss. The basic purpose of this descriptive part has been to outline the legal development of pure economic loss in order to show how the present position regarding liability has developed successively under the influence of case law, legislation and legal writings. The main issue there is to highlight some of the two systems underlying policy assumptions, which are in some respects both similar and different. In Chapters Six and Seven, a special legal problem is examined. Interest is there focused on claims by third parties for negligent advice and information. Both real and fictitious cases are introduced and analysed in order to show how the two legal systems deal with the same problem. The solutions to the problems that arise in this area are linked to the general position regarding pure economic loss and consequently, the first descriptive part of the work is an essential base for the analysis. At the same time, the conclusions found in the last two Chapters are expected to provide a clearer understanding of the general argumentation regarding pure economic loss. (Less)
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author
Wredström, Linn
supervisor
organization
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
Komparativ rätt
language
English
id
1563137
date added to LUP
2010-03-08 15:55:31
date last changed
2010-03-08 15:55:31
@misc{1563137,
  abstract     = {According to Chapter 2 Section 2 of the Swedish Tort Liability Act, pure economic loss arising in non-contractual relations shall be compensated if the tortfeasor has caused the loss through the commission of a crime. Although never intended, until recently, the general view was that in the absence of legislation, damages could only be awarded for pure economic loss outside contractual relations if suffered in connection with a crime. Through a string of cases starting with the landmark decision in NJA 1987, p. 692 (the so called Kone case), the traditional Swedish restrictive view on pure economic loss seems to have given way for a more flexible approach where circumstances in the specific case and the need for awarding compensation are now taken into account. The basis for this expansion of liability is that liability can arise in non-contractual relations if the third party is found to have had a justifiable reason to place his trust in the act of the tortfeasor and the latter has or ought to have realised that the loss could occur as a result of the tortious act. By using this ''justifiable reliance'' principle which was laid down in Kone, the Swedish Supreme Court has concluded that professionals may be liable for losses suffered by others than their contractual parties even if no crime has been committed. This general principle seems to be in well harmony with the English principle on recovery for pure economic loss in respect of professional negligent misstatements, advice and performance of services as enunciated by the House of Lords in the case of Hedley Byrne &amp&semic Co v Heller &amp&semic Partners in 1963 and as extended under Henderson v Merrett Syndicates Ltd. Liability will be imposed where a ''special relationship'' arises between the parties. Such a relationship will arise if the claimant has placed ''reasonable reliance'' on the defendant's special skill and care and the defendant has made a ''voluntary assumption of responsibility'' for the statement or service given. One of the purposes of the present study is to account for some of the differences and similarities in the approach on this issue in the English and Swedish legal systems. The study has been carried out within a case oriented comparative methodology, in order to provide a picture of how Sweden and England deal with the problem of pure economic loss compared with each other. The present work is in part descriptive and in part analytical. Chapters Two through Five provide a general presentation of the two legal systems as well as a presentation of liability for pure economic loss. The basic purpose of this descriptive part has been to outline the legal development of pure economic loss in order to show how the present position regarding liability has developed successively under the influence of case law, legislation and legal writings. The main issue there is to highlight some of the two systems underlying policy assumptions, which are in some respects both similar and different. In Chapters Six and Seven, a special legal problem is examined. Interest is there focused on claims by third parties for negligent advice and information. Both real and fictitious cases are introduced and analysed in order to show how the two legal systems deal with the same problem. The solutions to the problems that arise in this area are linked to the general position regarding pure economic loss and consequently, the first descriptive part of the work is an essential base for the analysis. At the same time, the conclusions found in the last two Chapters are expected to provide a clearer understanding of the general argumentation regarding pure economic loss.},
  author       = {Wredström, Linn},
  keyword      = {Komparativ rätt},
  language     = {eng},
  note         = {Student Paper},
  title        = {Liability for Pure Economic Loss in English and Swedish Law of Tort - a comparative analysis with special regard to problems concerning misrepresentation in non-contractual relations},
  year         = {2004},
}