In its broadest sense, the "economic loss rule"
prohibits recovery in tort for purely economic loss incurred under
contract law.
The Merriam-Webster Dictionary online
defines tort as "a wrongful act other than breach of contract
for which relief may be obtained in the form of damages or an
injunction." Negligence, the most common tort claim, is
the failure to exercise the care that a reasonably prudent person
would exercise in similar circumstances. Thus, where a
contract exists governing the subject matter of the dispute, claims
between the parties must be based on the contract terms, and a
tort-based claim between the parties will typically be barred.
The rationale for the economic loss rule is that where a
contract exists, the parties have freely negotiated to include or
exclude terms governing the parties' respective rights,
obligations, and remedies. If a party to that contract
could extend its remedies beyond those set forth in the contract,
this would
