• In the case of Hamble Fisheries v Gardner (The Rebecca Elaine) [1999] 2 Lloyd’s Rep 1, it was held that, in cases of pure economic loss, there is no duty to warn customers of product defects where there is no assumption of responsibility made by the proximity or the relationship between the parties.

Facts of the Case

  • C bought an engine for a fishing vessel. The engine came with a warranty against defects from the manufacturer, and a manual stating that the engine could operate without being replace for 20,000 hours.
  • The manufacturers did not sell engines directly, and there was a chain of contracts between them and the boatbuilders.
  • Sometime after this purchase, D bought out the manufacturer of the engine. There was no contractual relationship between D and C.
  • D became aware of a defect within the pistons of the engine but did not warn C, or any other purchaser, aware of this.
  • While at sea, the pistons of C’s engine failed. While no physical damage occurred to the vessel or the crew, C suffered economic loss as a result.
  • C contended that, since D was aware of the danger, D’s duty of care as the (adoptive) manufacturer should not be limited to the prevention of physical damage, but could include reasonably foreseeable economic loss.

Issues

  • Did D have a duty to warn C of the defects, even if the defective product had been manufactured by an independent contractor?

Held by the Court of Appeal (Civil Division)

  • Finding for D, that the duty of a manufacturer to warn customers of product defects only extended to cases involving physical harm to property or persons. It did not extend to pure economic loss cases.
  • There was no contractual relationship between D and C or relationship akin to contractual dealings that would indicate C relied on D. As such, D could not be held to have assumed responsibility towards C.

Tuckey L.J.

  • Donoghue v Stevenson and Grant v Australian Mills are authorities for a manufacturer owing a duty of care to avoid physical injury to persons or damage to property. They do not extend to cases of pure economic loss.
  • Hedley Byrne and subsequent cases have indicated that there is no special category of duty for failure to warn of a product’s defects.
  • There is no relationship between C and D that indicates proximity between them. Even the manual, which D can be said to have adopted, was on the facts not relied on by C in their operations regarding the engine. D cannot be said to have assumed responsibility towards C, nor can C said to have placed any real reliance on D.


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