Constructing a New Action for Negligent Infliction of Economic Loss: Building on Cardozo and Coase

This Article proposes the creation of a new tort of negligent infliction of economic loss, a hybrid of negligence, negligent representation, and breach of contract. An action in this new tort would permit an injured party to recover for economic loss caused by a person with whom the party is not in contractual privity. This Article focuses on the infliction of economic loss by negligent construction, where courts have applied various doctrines and arrived at six distinct and inconsistent approaches to liability issues. This Article provides a solution applicable to litigation for negligent construction.

Any action should protect an injured party's reliance rather than expectation interests consistent with the economic risks and benefits associated with such an action. This Article structures in Restatement-like format a new action to protect the injured party's reliance on the tortfeasor, without exposing the tortfeasor to unacceptable risks. Finally, this Article suggests how to recast the elements of the proposed tort into more general terms for application to any dispute involving the negligent infliction of economic loss.