economic loss rule
GARY T. SCHWARTZ
rule in the United States
According to Chapter I of this volume, ‘[p]ure economic loss is one of the most discussed topics of European scholarship. Fascination with the subject…has developed into a wealth of literature about this frontier notion.’ My introductory comment about the American situation is that such an assessment could not be fairly made about American tort scholarship, or about the American tort case law more generally. Instead, the doctrine that disallows recovery for economic losses in negligence cases is one that is rarely discussed by scholars and is indeed often ignored by courts. (The implications of this judicial neglect are discussed below.) However, there are one or two important exceptions to this generalization, which will be explained at some length below.
Let me now provide relevant background. The Restatement of Torts is a semi-official source of tort doctrine. The First Restatement was published, in relevant part, in 1939.1 It included a section (§ 766) creating liability for the purposeful inducement to breach of contract and the purposeful interference with prospective economic advantage; but it said nothing at all about negligence liability. The Second Restatement was published, in relevant part, in 1979.2 In §§ 766, 766B, and 767, it reworked the rules on liability for purposeful or intentional interference. But in addition to that, the Second Restatement included a new provision (§ 766C) stating that ‘one is not liable to another for pecuniary harm… if that harm results from the actor’s negligently interfering with the other’s performance of his contract or making the performance more expensive or burdensome’, or if the harm results from ‘interfering with
1 4 Restatement of Torts Vol. 3 (1939).
2 4 Restatement (Second) of Torts (1979).