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Economic loss rule

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Definition Edit

The economic loss rule is a court-created doctrine which prohibits the extension of tort recovery for cases in which a product has damaged only itself and there is no personal injury or damage to other property and the losses or damages are economic in nature. It preserves the distinction between contract and tort law and prevent parties to a contract from avoiding agreed-upon contract remedies and seeking broader remedies under tort theory than the contract would have permitted.

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