By Sarah A. Johnson, Esq.
The economic loss doctrine is the legal principle that economic loss may not be recovered under a negligence or tort theory.1 “Economic loss” has been defined as damages for inadequate value, cost of repair and replacement of a defective product, or the consequent loss of profits, as well as the loss of value of the product due to its inferior quality.2 The theory behind this doctrine is that a purchaser’s wish to reap the benefits of his bargain is not an interest protected by tort law.3 Rather, the remedy for economic loss relating to the purchaser’s disappointed expectations properly lies in contract.4
Meticulous Engineer was hired to do the calculations for the demolition plans in connection with the renovation of Old Warehouse. The drawings indicated that part of Old Warehouse was to be demolished and a small addition was to be added to the remaining part of Old Warehouse. Unfortunately, Destroy Contractors, the demolition contractor, did not follow the demolition plans, causing a collapse to part of Old Warehouse that was intended to be restored and reused.