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

In Arkansas, the economic loss rule is a legal concept that limits the damages recoverable from a defective product. The rule says that a consumer cannot sue for negligence when they suffer economic losses from a product that does not cause physical damage or personal injury. For example, if someone purchases a faulty car part that does not cause an accident, they would be limited to recovering the cost of the part itself—not any consequential damages incurred from having to pay to have the part replaced. The economic loss rule is based on the notion that a seller of a product is not liable for damages resulting from the product’s inability to do what it was intended to do. Under this logic, the purchaser is only allowed to recover the amount of the economic loss, and not any damages beyond that. The economic loss rule does not always apply in cases involving defective products. In certain situations, consumers may be entitled to sue the manufacturer for negligence if they can prove that the product was unsafe or that the manufacturer was aware of the product’s potential to cause harm. In Arkansas, the economic loss rule has been applied successfully to cases involving medical products, an automotive part, and a pet food recall. It has been found to be important in helping to protect the interests of both the consumer and the seller during disputes over defective products.

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

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