Comparative Economic Loss: Lessons from Case-Law-Focused Middle Theory

Abstract

In common law jurisdictions outside the United States, Gary Schwartz was the most highly regarded American torts scholar of his time, not least because of the similarity of his approach to the approach adopted by the vast majority of common law scholars outside the United States. This case-law-focused middle theory seeks to promote legal reasoning that is precise, internally coherent, and normatively convincing, and aims to provide a high level of predictability in relation to the way future cases will be decided in legal environments of relatively tight adherence to precedent. This Article reports the exciting progress this method has achieved in non-U.S. common law jurisdictions in the area of claims for pure economic loss in the tort of negligence. It suggests that courts adhere to the following propositions. The fact that the economic loss to the plaintiff was foreseeable is not sufficient to generate a duty of care. There is no normatively coherent justification for grouping cases together in pockets on the basis of superficial factual similarities. Whatever the factual matrix of the case, courts will be concerned by five substantive factors that can be stated as prerequisites for the recognition of a duty of care. These relate to: the defendant's legitimate economic self-interest; whether the plaintiff class and the quantum of recoverable loss can be described by criteria that are normatively justifiable; whether these criteria allow the relevant class and quantum to be reasonably ascertainable by the defendant; whether the plaintiff could have secured appropriate self-protection; and whether the plaintiff was especially vulnerable.