FLK1 · Tort
Pure economic loss & psychiatric harm
SQE1 revision notes — the key rules, leading cases and common traps for this topic, in plain English and current to 2026.
TOR.04 — Pure Economic Loss & Psychiatric Harm
Both are areas where the duty of care is restricted by policy (floodgates, indeterminate liability). Default position: no duty, subject to recognised exceptions.
Pure economic loss (PEL)
PEL = financial loss not flowing from physical damage to the claimant's own person or property.
- Consequential economic loss (e.g. lost profit because your damaged machine stopped) IS recoverable.
- Pure economic loss is generally not recoverable in negligence.
- Spartan Steel v Martin — cut power cable: damaged melt + its lost profit recoverable; profit on melts that could not be made (pure loss) not recoverable.
- Murphy v Brentwood — defective buildings/products: cost of repairing the defect itself is PEL, not recoverable (overruled Anns). Damage to other property or persons can be.
The exception — negligent misstatement (Hedley Byrne v Heller): recoverable where there is an assumption of responsibility plus reasonable reliance (a "special relationship"). Refined in Caparo v Dickman: foreseeability + proximity + fair, just and reasonable. Auditors owed no duty to investors at large — purpose and known recipient matter. Extends to negligent provision of services (Henderson v Merrett; White v Jones — disappointed beneficiary of a negligently delayed will).
Trap: a disclaimer may negate assumption of responsibility but is subject to UCTA 1977 / CRA 2015 reasonableness (Smith v Eric S Bush).
Psychiatric harm
Must be a recognised psychiatric illness (e.g. PTSD, clinical depression) — not mere grief, fear or distress.
- Primary victim — in the actual zone of physical danger, or reasonably believed themselves to be. Need only foreseeable physical injury; psychiatric harm need not be foreseeable (Page v Smith). Eggshell-skull applies.
- Secondary victim — witnesses harm to another. Must satisfy the Alcock control mechanisms: (1) close ties of love and affection (presumed for spouse/parent–child); (2) proximity in time and space to the event or its immediate aftermath; (3) perception by own unaided senses (not TV/being told); plus foreseeable shock in a person of ordinary fortitude. Alcock v Chief Constable of South Yorkshire (Hillsborough).
- McLoughlin v O'Brian — immediate aftermath satisfied (hospital, 2 hours).
- Paul v Royal Wolverhampton (2024, UKSC) — a medical-negligence death witnessed later is generally not a compensable "event"; tightens secondary-victim claims against doctors.
Traps: rescuers/employees are not automatically primary victims (White v CC South Yorkshire); "sudden shock" still required for secondary victims; distinguish primary vs secondary before applying any test.
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A man is a front-seat passenger in a car driven by a friend. The friend drives negligently and collides with another vehicle. The man was not wearing his seatbelt. Medical evidence establishes that had he worn the seatbelt his injuries would have been substantially less severe, though he would still have suffered some injury from the impact. The man sues his friend in negligence. Liability for the collision is admitted. The defendant argues that the man's damages should be reduced because of his failure to wear a seatbelt.
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More Tort topics
- Negligence — duty of care
- Negligence — breach & standard of care
- Negligence — causation & remoteness
- Employers' liability & vicarious liability
- Occupiers' liability (1957 & 1984 Acts)
- Product liability (Consumer Protection Act 1987)
See all topics in the FLK1 guide or the full SQE1 syllabus.
Independent SQE1 revision notes for study — not legal advice; check primary sources before relying on any point. Exam rules are set by the SRA; see the official SQE site.