Avoiding The Economic Loss Rule In Construction Claims

May 1, 2013

This article was originally published in the Subrogator, a publication by the National Association of Subrogation Professionals, Spring-Summer, 2013. © Copyright 2013 by NASP. All rights reserved. Republished by Butler with permission from NASP.

The Economic Loss Rule  was initially developed in the products liability context

The essence of the early holdings discussing the [Economic Loss Rule] is to prohibit a party from suing in tort for purely economic losses to a product or object provided to another for consideration, the rationale being that in those cases ‘contract principles [are] more appropriate than tort principles for resolving economic loss without an accompanying physical injury or property damage.’2

However, over the years, courts have used the product liability concepts created in the early cases interpreting the Rule to expand the Rule’s application to include construction claims, which has created problems in applying the Rule in non-product liability claims. “[T]the troublesome cases discussing the dreaded economic loss rule have usually arisen in the field of construction.”3

Avoiding The Economic Loss Rule In Construction Claims