Statements or advice causing purely economic loss

Example: A asks B for a loan of money. B agrees to lend the money to A provided A's bank gives A a good credit reference. A asks his bank to write a reference and send it to B. The bank fails to investigate A's financial situation before giving the reference. They tell B that A is creditworthy. In fact A is not able to pay his bills as they fall due. B lends the money to A, but A fails to repay it and goes insolvent (bankrupt).

Comment: In Australian law, negligent misstatements causing purely economic loss are a special type of case. The problem is that there are almost no natural limits on the extent to which negligent misstatements or advice can be communicated to others and cause harm. Historically, the courts refused to impose liability on a defendant in such circumstances. They have done so since the mid-1960s but, to keep the potential liability within reasonable limits, special factors are taken into account to limit the duty of care. In particular, a duty of care only arises if, in the circumstances, the person responsible for the misstatement should have realised that they were being relied on to give accurate information or advice on the basis of which the other party might act, and it was reasonable for the plaintiff to have relied on that information or advice.