## Facts

- Muirhead, the plaintiff, purchased a water tank manufactured by Industrial Tank Specialties Ltd.
- The water tank was defective and failed to function as intended.
- As a result of the defect, Muirhead suffered significant financial loss due to being unable to use the tank for its intended purpose.
- No physical harm to person or property occurred; only financial (economic) loss was claimed.
- Muirhead argued that Industrial Tank Specialties Ltd, as manufacturer, breached its duty of care by supplying a defective product and sought compensation for the resulting financial losses.

## Issues

1. Whether a manufacturer owes a duty of care in negligence to protect consumers from pure economic loss arising from a defective product that does not cause physical damage.
2. Whether the principles of Donoghue v Stevenson permit recovery for economic loss in product liability claims absent physical harm.
3. Whether policy considerations supporting the limitation of liability for pure economic loss apply in this context.

## Decision

- The Court of Appeal held that liability in negligence for defective products is restricted to cases involving physical damage and does not extend to claims for pure economic loss.
- The court found that the manufacturer’s duty of care did not include protection against purely financial losses without accompanying physical harm.
- Muirhead was denied recovery in negligence for his economic losses.
- The court reinforced the established distinction between recoverable physical damage and unrecoverable pure economic loss in tort law.

## Legal Principles

- Recovery in negligence for defective products generally requires proof of physical damage to person or property; pure economic loss is not recoverable unless within defined exceptions.
- Manufacturers owe a duty of care to prevent foreseeable physical harm, but not to compensate for economic losses arising solely from defective products.
- The limitation on recovery for pure economic loss serves to avoid indeterminate and potentially unlimited liability for manufacturers.
- Claimants suffering only economic loss from defective products are typically expected to seek contractual remedies rather than tortious claims.
- The reasoning aligns with prior decisions such as Spartan Steel & Alloys Ltd v Martin & Co (Contractors) Ltd and the basic principles established in Donoghue v Stevenson.

## Conclusion

The Court of Appeal in Muirhead v Industrial Tank Specialties Ltd [1986] QB 507 clarified that, in the absence of physical damage, negligence claims for pure economic loss arising from defective products are not recoverable, confirming the boundary between tortious liability and contractual remedies in product liability cases.
