What is the “economic loss” rule in defective products law?

The economic loss rule is an important concept in defective products law in Arkansas. Essentially, this rule states that if a product is defective, the buyer can only recover economic losses suffered as a result of the defect, and not non-economic losses. Economics losses are those that are directly related to the defective product. An example would be a buyer that purchased a lawnmower and suffered an economic loss because it stopped working shortly thereafter. The buyer might be able to claim the purchase price of the lawnmower, as well as repair costs. Additionally, the economic loss rule might apply if the buyer sold the lawnmower for an amount less than the original purchase price due to the defect. Non-economic losses, however, are those that are not directly related to the defective product. An example would be a buyer that experienced physical pain or emotional distress due to the defective product. In Arkansas, such losses would not be recoverable under the economic loss rule since they are not directly related to the defective product. Since the economic loss rule is often the determining factor when filing defective products law claims in Arkansas, it is important to understand how this rule applies. Generally, damages due to a defect in the product are only recoverable if they can be directly tied to the product, such as repair and replacement costs, and not incidental or personal losses.

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What is the “economic loss” rule in defective products law?

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