ECONOMIC LOSS & TORT LAW

Economic Loss and Tort Law



Economic Loss and Tort Law

Introduction

The notion of economic loss has existed for many years, essentially as far back as the acknowledgement of negligence, all be it, not in the form, one may perceive it today. Over time, the courts have struggled in establishing the boundaries of what may constitute economic losses in relation to the legal interpretation of the respective Tort, a feat unaided by the lack of a clear definition (Kinder, 2006, 128). The term “Tort” is derived from the Latin word that means "twisted or wrong" and is used to refer to a civil wrong in legal issues. A tort differs from a criminal act in the sense that criminal acts routinely committed against the state, and a tort is a wrong committed against an individual.

The law of torts comes from a combination of legislative and enactments common-law principles, and is normally found in regional, state, and national civil codes where the limits on damages and the statute of limitations for tort cases are detailed. The law of torts classified into three core classes: intended torts, negligent torts and strict liability torts (Harpwood, 2003, 84).

This paper aims to discuss the development of some of the obvious categories of economic loss chronologically, supported by empirical evidence through the principal cases in the subject area. It will focus on the restrictions which have come, and in some instances gone, as a result of judges' indecision in upholding various policy considerations. The paper makes specific reference to the tort laws in practice and how these shape the consequences of the various economic losses.

Discussion

The legal dictionary defines Tort law as "A body of rights, obligations, and remedies that are applied by courts in civil proceedings to provide relief for persons who have suffered harm from the wrongful acts of others." Some of the wrongs covered under tort law include either physical or psychological distress, damage to quality of life, incapacitation to earn a living, loss of companionship, medical expenses and attorney costs. The losses covered can be present and ones expected in the future (Cooke, 2005, 121).

A pure economic loss is one, which is not related to or results from any physical injury to a person, or damage to property. The scope of the duty of care in relation to pure economic loss has caused much difficulty for the courts. Partly because of the desire to avoid crushing liability and partly because of the need to avoid incompatibility with tort laws, the courts are unwilling to grant a remedy for economic loss caused by a negligent act (Elliot & Quinn, 2009, 63). In order to control the scope of liability, the courts have adopted a controversial property-based control mechanism to deal with pure economic loss. Gilikar and Beckwith have expressed concern about the arbitrary line between economic loss resulting from damage to the claimant's own property (consequential) and economic loss resulting from damage to property in which the claimant only has a contractual interest ...