“Court limits recovery for pure economic loss in negligence claims”
The defendants negligently damaged an electricity cable while doing roadworks, cutting power to the claimants' steel factory. One batch of steel in the furnace was damaged and had to be sold as scrap, production was halted for 14.5 hours, and the claimants lost profits on four other batches they would have processed during the power outage.
Whether the claimants could recover pure economic loss (lost profits on unprocessed steel) in addition to physical damage and consequential economic loss arising from that physical damage.
The claimants could recover for the damaged steel and lost profit on that batch, but not for the pure economic loss representing profits on steel they could not process during the power cut.
This case established the fundamental principle limiting recovery of pure economic loss in negligence, influencing decades of subsequent tort law development. It remains a cornerstone case for understanding the boundaries between recoverable and non-recoverable economic losses.
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OSCOLA Citation
Spartan Steel and Alloys Ltd v Martin & Co (Contractors) Ltd [1973] QB 27 (CA)
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