Legal Definitions - economic-loss rule

The economic-loss rule is a principle in tort law that states a plaintiff cannot sue for purely monetary loss caused by the defendant, without physical injury or property damage. This rule is also known as the economic-harm rule or economic-loss doctrine.

For example, if a company purchases a defective product that causes financial loss, they cannot sue the manufacturer for tort damages. However, if the manufacturer made fraudulent claims about the product, the economic-loss rule may not apply, and the company could sue for damages.

Another exception to the economic-loss rule is when a special relationship exists between the parties, such as an attorney-client relationship. In such cases, the plaintiff may be able to sue for economic loss caused by the defendant.

The economic-loss rule is intended to distinguish between tort and warranty claims and prevent plaintiffs from seeking damages for purely financial losses.