Tortious Liability for Pure Economic Loss
torts clat_ug intermediate pyq_discussionKamal, a renowned businessman, suffers pure economic loss due to a fire in a nearby shopping mall. The fire was caused by a careless electrical wire in a building owned by Vikram. The building was rented by Dhiraj, who had rented it to a shopkeeper. Should Vikram be held liable for Kamal's pure economic loss? Explain.
This question tests your understanding of the Donoghue v Stevenson case, where it was established that a person takes a risk of injury to self or property if it is foreseeable. However, where the loss is purely economic, the courts have traditionally followed the rule in Hedley Byrne v Heller. So, the key is to identify whether the pure economic loss can be said to be a direct consequence of the defendant's negligence. This requires applying the principles of proximate cause and foreseeability. Don't get confused with the multiple defendants; focus on Vikram's liability.
I disagree, tort law shouldn't be used for pure economic losses. In Donoghue v Stevenson, it was physical harm that mattered, not economic. Expanding liability this way can lead to a flood of frivolous claims. Take the case of Hedley Byrne & Co Ltd v Heller, where they argued for vicarious liability for pure economic losses. But the Privy Council didn't go along. We should follow the Indian courts' approach, which generally doesn't allow recovery in such cases.