Economic Loss Rule

Pronunciation: ek-uh-NOM-ik LOSS ROOL

Torts › Damages

Definition

Doctrine barring recovery of pure economic losses in negligence actions when there is no accompanying physical injury to person or property. Pure economic loss includes lost profits, cost of repair or replacement, diminution in value, and disappointed economic expectations. The rule prevents unlimited liability for economic ripple effects and protects the boundary between tort and contract law. Exceptions exist for negligent misrepresentation, professional malpractice, special relationships, and some product liability cases.

Related terms

• Damages — The fourth and final element of negligence, requiring proof that the plaintiff suffered actual harm or loss. Damages…
• Economic Damages — Compensatory damages for quantifiable monetary losses. Includes past and future medical expenses, lost wages, lost earning capacity, property…
• Negligent Misrepresentation — Negligent false statement made in business or professional capacity with intent that plaintiff rely, plaintiff justifiably relies, causing…
• Proximate Cause — A limitation on liability requiring that the harm suffered must be within the scope of risk created by…

Go deeper

3 worked examples, 6 exceptions, landmark cases, flashcards, issue spotting and the interactive mind map for Economic Loss Rule are available with a free account.

Create a free account — the whole Torts subject is free.