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

The “economic loss” rule in defective products law is a North Carolina legal doctrine that restricts a consumer’s access to certain recovery remedies when a product is defective. This rule prevents consumers from filing tort claims against product manufacturers, and instead limits claims to breach of warranty claims. Under the economic loss rule, when a product is determined to be defective, consumers can only recover the lost value of the product and consequential economic losses suffered as a result of the defect, such as repair costs. The purpose of this rule is to ensure that consumers can only seek recovery for economic losses stemming from the purchase of a defective product, and cannot seek other non-economic damages, such as pain and suffering, which are typically associated with tort claims. In essence, the economic loss rule strives to establish a balance between ensuring consumers are adequately compensated and preventing excessive legal action for the same claim. By limiting claims to breach of warranty and economic losses, manufacturers are not unfairly held liable for damages they did not cause. However, the rule still allows consumers to recover the economic losses they suffered as a result of the defective product. As such, North Carolina law recognizes the economic loss rule as an appropriate way to protect both manufacturers and consumers.

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

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