The False Dilemma of the Economic Loss Doctrine

A defective product causes various types of damages. The type of damage suffered generally determines whether contract or tort law will govern resolution of the parties’ dispute. Contract law will control when the loss suffered is considered to be solely economic loss. For example, when a machine does not produce the number of parts/minute as warranted by the seller, the loss is solely an economic loss. On the other hand, when a defective product causes personal injury, tort law will be utilized to resolve the dispute. However, when the defective product causes “other property” damage (not economic loss or personal injury), both contract law and tort law claim application. The Uniform Commercial Code (U.C.C.) expressly provides for recovery of other property damage caused by a defective product. Coincidentally, the Restatement (Third) of Torts: Products Liability also expressly provides for recovery of other property damage caused by a defective product. The purpose of this Article is to offer a fresh approach to addressing other property damage disputes that emphasizes both contract and tort law rather than the current approach that requires a court to choose between contract or tort coverage