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

40 Pages Posted: 24 Dec 2006

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.

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

Suggested Citation

Bernstein, Anita, Keep it Simple: An Explanation of the Rule of No Recovery for Pure Economic Loss. Arizona Law Review, Vol. 48, p. 773, 2006, Emory Public Law Research Paper No. 06-34, Emory Law and Economics Research Paper No. 06-21, New York Law School Legal Studies Research Paper No. 06/07-17, Available at SSRN: https://ssrn.com/abstract=953431

Anita Bernstein (Contact Author)

Brooklyn Law School ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States
718-780-7934 (Phone)

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