economic loss

economic loss

in the law of tort or delict, certain claims for non-physical or non-proprietary damage caused negligently. Certain claims, although financial, are usually discounted from such discussion, viz. loss of wages consequent upon physical injury and loss of use following damage to property. The phrase then encompasses other cases where the plaintiff is suing because he has less money than he had before the events complained of There are, however, two kinds of cases that can be considered under this head, and they must be distinguished. There are primary claims, where the loss to the plaintiff has come directly and without any intervening damage to the person or property of another. Thus, negligent financial or legal advice causes such loss. Other cases are secondary: the plaintiff is poorer but only as a result of the defendant having harmed the person or property of another person, as where the defendant cuts an electricity company's cable but the plaintiff who operates an amusement arcade is poorer as a result. Cases of primary economic loss have the potential to be successful, whereas secondary cases are most likely to fail. Primary cases are governed by the principle of assumption of responsibility for the potential loss. Secondary cases are governed by a long line of authority disallowing recovery based upon contractual and other relations to the primarily injured party. There are exceptions to the non-recovery rule in secondary cases, and that is where the plaintiff has some possessory title like lien or hypothec; in these cases he may sue.

Collins Dictionary of Law © W.J. Stewart, 2006