Tag: Florida Corporate Defense

The Eleventh Circuit (which includes Florida) recently confirmed a rule early codified into contracts law known as the Economic Loss Rule, which prohibits a plaintiff from recovering under a torts-based claim (such as a claim for negligence) when a product defect fails to cause personal injury or property damage.

Although the Florida Supreme Court had previously strengthened the scope of the Economics Loss Rule, this recent case brought before the Eleventh Circuit demonstrates that parties still attempt to hold manufacturers and other businesses responsible for negligence when it is clear that contract law bars such a claim. Because of this risk, it is wise for businesses to build specific safeguards into legal contracts in order to avoid certain disputes.

The Economic Loss Rule

The Economic Loss Rule has long-prevented parties from bringing a tort claim when a product defect or failure only causes damage itself (i.e. results in economic loss) but does not cause harm or injury to an individual or their property. When this happens, any party who wishes to sue a manufacturer or business must sue under breach of contract, but not under product liability claims.