economic loss CASES

In English law, economic loss refers to financial loss suffered by a claimant as a result of another’s wrongdoing. It is a significant concept
in negligence because the law draws a clear distinction between economic loss that flows from physical damage and pure economic loss, which arises independently of any injury to persons or property.

Definition and principles

Economic loss encompasses monetary losses such as lost profits, repair costs, wasted expenditure, and loss of business opportunity. Where suchloss results from physical injury to a person or damage to property, it is generally recoverable as consequential loss.

By contrast, where the claimant suffers financial loss alone, without accompanying physical damage, the loss is classified as pure economic
loss. The law of negligence is traditionally reluctant to allow recovery for such loss due to concerns about indeterminate liability and
disproportionate exposure to claims.

Common examples

Consequential economic loss includes loss of earnings following personal injury or loss of profits caused by damage to business premises.

Pure economic loss commonly arises where a claimant relies on negligent advice, information, or services, or where commercial interests are harmed without any physical interference.

Legal position

Economic loss is recoverable in negligence where it is consequential upon physical damage and the usual elements of duty, breach, causation, and remoteness are satisfied. Recovery for pure economic loss is generally excluded unless an established exception applies, most notably where a duty of care arises from an assumption of responsibility.

Practical importance

The distinction between consequential and pure economic loss is central to assessing liability in professional negligence, construction,
commercial disputes, and claims against public authorities. Understanding where a loss falls helps determine whether a negligence claim is viable and which legal principles apply.

See also: Pure economic loss; Negligent misstatement; Assumption of responsibility; Professional negligence; Remoteness of damage; Negligence.