Download this Paper Open PDF in Browser

Liability for Pure Financial Loss in Europe: An Economic Restatement

51 Pages Posted: 26 Oct 2001 Last revised: 12 Jan 2013

Mauro Bussani

University of Trieste School of Law

Vernon V. Palmer

Tulane Law School

Francesco Parisi

University of Minnesota - Law School; University of Bologna

Abstract

As generally understood in the law and economics literature, the economic loss rule states that a plaintiff cannot recover damages for a pure financial loss. The comparative study of the recoverability in tort of pure economic losses, however, reveals that the recognition and significance attributed to the economic loss rule and to the notion of "economic loss" varies considerably across Western legal systems.
This paper therefore revisits recent findings of comparative law about the recoverability of pure economic losses, and demonstrates that legal notions of pure economic loss encompass several types of situations, with little or no correspondence with the relevant economic taxonomy. In terms of economic analysis, several situations of economic loss are easily distinguishable and have very different significance for social welfare analysis. What appears to be erratic judicial applications of a single economic loss rule are in fact justifiable and often valid applications of different underlying economic principles. From an economic perspective, it may in fact be necessary to have more than one category for the treatment of economic loss, given the inability for a single legal instrument to address the variety of cases that may fall within such an iconoclastic rule.

Notes: This abstract was previously published under the title "The Comparative Law and Economics of Pure Economic Loss."

Suggested Citation

Bussani, Mauro and Palmer, Vernon V. and Parisi, Francesco, Liability for Pure Financial Loss in Europe: An Economic Restatement. American Journal of Comparative Law, Vol. 51, No. 1, pp. 113-162, Winter 2003; George Mason Law & Economics Research Paper No. 01-27. Available at SSRN: https://ssrn.com/abstract=288091 or http://dx.doi.org/10.2139/ssrn.288091

Mauro Bussani (Contact Author)

University of Trieste School of Law ( email )

Piazzale Europa 1
Trieste, Trieste 34100
Italy

Vernon Valentine Palmer

Tulane Law School ( email )

6329 Freret Street
New Orleans, LA 70118
United States
504-865-5978 (Phone)

Francesco Parisi

University of Minnesota - Law School ( email )

229 19th Avenue South
Minneapolis, MN 55455
United States

University of Bologna ( email )

Piazza Scaravilli 1
40126 Bologna, fc 47100
Italy

Paper statistics

Downloads
1,022
Rank
16,984
Abstract Views
11,737