Economic-Harm Rule Law and Legal Definition

Economic-harm rule is a principle of tort law that a plaintiff cannot sue in tort to recover for purely monetary loss as opposed to physical injury or property damage caused by the defendant. Many states recognize an exception to this rule when the defendant commits fraud or negligent misrepresentation, or when a special relationship exists between the parties such as an attorney–client relationship.

The economic-harm rule is also known as the economic loss rule.

The following is an example of a caselaw on the economic harm rule:

The economic loss rule is a judicially created doctrine that marks the fundamental boundary between contract law, which protects expectancy interests created through agreement between the parties, and tort law, which protects individuals and their property from physical harm by imposing a duty of reasonable care.[Presnell Constr. Managers, Inc. v. EH Constr., LLC, 134 S.W.3d 575, 584 (Ky. 2004)]