Direct Economic Loss Law and Legal Definition

Direct economic loss means damage flowing directly from insufficient product quality. Hence, direct economic loss include ordinary loss of bargain damages which is the difference between the actual value of the goods accepted and the value they would have had if they had been as warranted. It means that the direct economic loss includes the loss of the benefit of the bargain that is the difference between the value of the product as represented and its value in its defective condition.

In Professional Lens Plan, Inc. v. Polaris Leasing Corp., 234 Kan. 742 (Kan. 1984), the court had observed that “The law permits a non-privity buyer to recover for direct economic loss if the remote seller has breached an express warranty. Where the buyer cannot show reliance on express representations by the remote seller, however, the case law is in conflict. The majority of courts still appear to hold that absent such reliance, a non-privity buyer, whether commercial or consumer, cannot recover for direct economic loss on either an express or an implied warranty theory.”