Duty Of Care And Novation Difficulties

A judgment last Thursday shed light on the confused law as to when a duty of care is owed for pure economic loss. That is, when a non-contractual duty is owed to another to behave carefully to avoid causing a loss that does not arise as a result of personal injury or property damage (in which cases the law readily implies a duty of care). This is important on projects where parties abound but there is no contract, for whatever reason, between claimant and defendant.

A party who suffers a financial loss may not, perhaps, want to pursue those he is in contract with because he has no clear contractual entitlement, the other party to the contract is insolvent, they are both companies that are part of the same group or other corporate arrangements. The last of these seems to underlie this latest case.