The Collision of Tort and Contract in the Construction Industry

Over the past two decades, several courts have allowed construction industry plaintiffs to assert tort claims to recover for purely economic losses (i.e. other than injury to person or property) from other participants in the construction process. Parties assert tort claims, instead of or in addition to contract claims, to take advantage of the more liberal tort damage rules and, probably more importantly, to escape unfavorable contract provisions. This article briefly discusses the different origins and goals of tort and contract law. It then reviews some of the decisions allowing recovery of purely economic losses in tort as well as several recent decisions, in both the product liability and construction fields, reflecting what the authors believe is an emerging trend away from allowing such actions.

The authors' thesis is that the emerging "economic loss" rule reflects the fundamentally different goals of tort and contract law and serves to enforce the legitimate expectations of participants in the construction industry and other fields of commerce.