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Have your contract and your tort!

ChristineYou may have heard change is in the air for 2013, and apparently the Florida Supreme Court got the message. Recently our Florida Supreme Court made a major change in what type of claims may be made in contract dispute cases by ruling that the economic loss rule now only applies in product liability cases (as the court says was always intended). First, what is the economic loss rule? The economic loss rule bars tort/negligence claims for economic losses arising from a situation in which a contract exist between the parties. The economic loss rule was first enforced in Florida as applied to product liability cases. Essentially when parties do not have a contract, the law provides for remedies through tort law so long as there is personal injury or damage to the property at issue. If the two parties did have a contract, the remedy for economic damages resulting from a product defect which damages only the product itself, rests in the contract/warranty law. The overlap of these two potential causes of action is prohibited by the economic loss rule (cannot seek remedy through tort law if a contract or contractual privity exists). As time went on the economic loss rule was applied beyond the products liability realm. Court’s struggled in the fair application of the ELR and developed exceptions to the rule. Over time the jurisdictions in Florida began issuing conflicting rulings with regard to the application of the economic loss rule and its exceptions. As a result many scholarly articles have been written on the application of the economic loss rule and its exceptions. In its application, the economic loss rule often limited a party’s ability to seek damages by limiting the theories under which damages could be sought. Alas, worry no more my fair contracting parties! Finally, the Florida Supreme Court revisited the creation and application of the economic loss rule and in doing so concluded “it was time to retreat to its origins and held that the “economic loss rule is limited to product liability cases.” Thus, from here forward, when you are reviewing your possible remedies for any non-product liability case, you may indeed be able to have your contract and your tort!