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

The “economic loss” rule in defective products law is a restriction put in place to protect manufacturers and sellers of products from certain types of claims brought by consumers. This rule states that a consumer cannot sue the manufacturer or seller for any economic losses they experience due to the product being defective, unless the manufacturer or seller was negligent in some way. In Georgia, under the economic loss rule, a plaintiff can only recover damages for personal injury or physical damage to property that was caused by a defective product, and not for economic losses from things like lost wages, lost business, or additional expenses in replacing the product. Economic loss is defined as the decrease in market value of the product, or the difference between the actual cost of the product and the value of the product if it had performed as expected. In other words, when a consumer invests in a product, they cannot sue for the difference between what the product cost them and what it should have been worth because the manufacturer failed to provide a good product. The economic loss rule is important to manufacturers and sellers because it provides them with assurance that consumers will not be able to use them as a source of compensation for investments in a defective product. This rule places the burden of recovering compensation on consumers, and also protects manufacturers from the risk of a large number of expensive lawsuits.

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

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