Keep it Simple: An Explanation of the Rule of No Recovery for Pure Economic Loss

Abstract:     
This article, prepared for the Dan B. Dobbs Conference on Economic Torts held at the University of Arizona in March 2006, joins commentary on themes raised in the draft Restatement (Third) of Torts: Liability for Economic Loss, by returning to an old question: Why does tort doctrine, not only in the United States but around the world, generally refuse to compensate a plaintiff for "pure economic loss" - an injury that can be seen only as missing money, unaccompanied by personal injury or property damage - attributable to a defendant's careless conduct? The answer offered here is the precept of trying to "keep it simple." More than other fields, which often invite repeat-player expertise, tort law strives to make its doctrines and processes intelligible to persons of limited experience and sophistication. "Simple" enough injuries in this framework include breached promises and visible or tangible traumatic impacts. Losses related to financial expectancy can be too hard to comprehend.

Number of Pages in PDF File: 40

Keywords: economic loss, expectancy, economic analysis, floodgates, proportionality, exclusionary rule, Restatement (Third) of Torts, visual, Kohlberg

Accepted Paper Series