The economic loss rule is a legal principle that limits the ability to recover damages for purely economic losses in the absence of physical injury or property damage. In essence, if a product is defective but does not cause any personal injury or damage to other property, a person cannot sue for the economic value lost due to that defect. This rule is particularly relevant in product liability cases.
The economic loss rule is primarily used in civil law, particularly in product liability cases. It helps courts determine whether a plaintiff can recover damages when a product fails to perform as expected but does not cause physical harm. Users may find legal templates related to product liability and negligence useful on platforms like US Legal Forms, which offer resources for drafting necessary legal documents.
Here are a couple of examples of abatement:
Example 1: A consumer purchases a washing machine that malfunctions, causing it to flood the kitchen. The consumer can sue for damages related to the property damage caused by the flooding, but not for the cost of the washing machine itself if there was no injury or damage to other property.
(Hypothetical example) Example 2: A company produces a batch of defective smartphone batteries that do not explode or cause injury but fail to function. The company cannot claim losses due to the defective batteries under the economic loss rule if no other damage occurred.
| State | Economic Loss Rule Application |
|---|---|
| Georgia | Follows the economic loss rule strictly, requiring personal injury or property damage for recovery. |
| California | Allows some exceptions, particularly in cases involving professional services. |
| Texas | Generally adheres to the economic loss rule but has specific exceptions for certain types of contracts. |
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
| Term | Definition |
|---|---|
| Negligence | Failure to exercise reasonable care, leading to damage or injury. |
| Product Liability | Legal responsibility of manufacturers and sellers for defective products that cause harm. |
| Contractual Liability | Obligation to fulfill the terms of a contract, which may include economic losses. |
If you believe you have suffered economic losses due to a defective product, first assess whether there was any personal injury or damage to other property. If not, your ability to recover may be limited. Consider using US Legal Forms to find templates for legal documents related to product liability or consult a legal professional for advice tailored to your situation.
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It is a legal principle that prevents recovery for economic losses in the absence of personal injury or property damage.