When bringing a claim against a professional such as a solicitor, there are concurrent duties owed to a client which if breached, give rise to claims. A professional who fails to exercise reasonable care in the performance of a service, may be liable for breach of contract and negligence (a claim in tort).
There is a difference in legal principles to be considered when assessing whether a certain loss is recoverable for breach of contract or for negligence… so which rules apply when you bring a claim for both?
The Court of Appeal has recently given some guidance in respect of ‘remoteness of damage’ in Wellesley Partners LLP v Withers LLP and we are now seeing this guidance applied.
Remoteness of damage concerns whether the law is prepared to attribute a certain loss to the wrongdoing, be it a breach of contract or negligence. Say for example, a solicitor’s wrongdoing causes you to lose a completely unconnected unusual but lucrative business opportunity. Is that loss recoverable?
In a breach of contract action, the loss suffered is only recoverable if the potential damage was in the contemplation of the parties i.e. the actual loss could have been foreseen, not one which was just possible.
In negligence, you only have to establish that the damage is of a kind which is reasonably foreseeable, even in the most unlikely case. The test in negligence cases is much wider than in contract, which is more advantageous to the innocent party.
In the Wellesey case, the Court held that where there is a contractual liability and a tortious liability, the test for recovering financial loss should be the more restrictive contractual ‘reasonable contemplation’ test rather than the wider ‘reasonable foreseeability’ test in negligence claims.
So what does this mean? When bringing a claim against a professional, if financial loss is sustained which was not reasonably contemplated as being a potential loss if the professional failed to perform their duties properly, then this loss may no longer be recoverable.
Farleys has a team of specialist commercial litigation lawyers who are also members of the Professional Negligence Lawyers Association. If you are looking to make or defend a professional negligence claim, get in touch with one of our expert team today