Also known as: pure economic loss · purely economic losses · economic loss
Written by attorneys · grounded in primary & secondary sources — see below
A category of harm consisting of pecuniary or commercial loss that does not arise from actionable physical, emotional, or reputational injury to persons or physical injury to property. Recovery in tort for such loss is restricted by the economic loss rule in products liability cases.
A buyer of a vessel sued the manufacturer in tort after engines malfunctioned, producing only repair costs and lost profits. No personal injury or other property damage occurred. The Florida Supreme Court held that the economic loss rule bars such tort recovery only in products liability cases and does not extend to other contractual settings.
East River Steamship chartered vessels fitted with turbines supplied by Transamerica Delaval. The turbines failed at sea, causing only economic harm from repair expenses and charter cancellations. East River sued the manufacturer in tort. The court held that the claim sounded in contract because the loss was purely economic and limited to the product.
Select any source to read its text and confirm it supports the definition.
A plaintiff sought tort recovery for purely economic losses arising from a contractual relationship outside products liability. The Florida Supreme Court receded from earlier expansions of the economic loss rule and held that the rule itself applies only in products liability cases to bar recovery absent personal injury or property damage.
Prism Analytics hired Arthur Young to audit its financial statements. Bily, a potential investor outside privity, read the audit and purchased shares. When the company failed, Bily suffered investment losses and sued the auditor for negligence. The court refused to impose a tort duty because the harm was purely economic and fell outside the products-liability context of the economic loss rule.
People Express Airlines operated near a rail yard operated by Consolidated Rail. A derailment forced temporary closure of the airport, causing the airline to lose ticket revenue. People Express sued the railroad in negligence for the business interruption. The court recognized a limited duty outside products liability because the economic loss was foreseeable and the plaintiff was within a defined class of victims.
Investors bought Dura Pharmaceuticals stock after company statements about product prospects. When the truth emerged, share prices fell and investors incurred paper losses. They sued under securities laws alleging fraud. The court required proof that the economic loss was caused by the misrepresentation rather than market forces, noting the claim lay outside the products-liability economic loss rule.
No. The rule is limited to products liability cases and prevents a plaintiff from recovering purely economic losses in tort without accompanying personal injury or property damage. Outside that context, traditional tort duties and independent tort doctrines may still permit recovery.
Supporting sources
A loss is purely economic when it consists of pecuniary harm such as lost profits or repair costs that does not arise from physical injury to persons or other property. Damage confined to the defective product itself is the classic example.
Supporting sources
Recovery depends on whether the defendant owed a duty of care to protect against that type of harm. Some jurisdictions recognize a duty when the loss is foreseeable and the plaintiff belongs to a limited class, while others require an independent tort or contractual privity.
Supporting sources
…Product Liability Advisory Council suggests, that the breach of implied warranty theory should be confined to recovery for economic loss ( see generally , Bocre Leasing Corp. v General Motors Corp. , 84 N.Y.2d 685; Bellevue S. Assocs. v HRH Constr. Corp. , 78 N.Y.2d 282; Schiavone Constr. Co. v Elgood Mayo Corp. , 56…