Economic Torts

Economic tortsl typically involve commercial transactions, and include tortious interference with trade or contract, fraud, injurious falsehood, and negligent misrepresentation. Negligent misrepresentation torts are distinct from contractual cases involving misrepresentation in that there is no privity of contract; these torts are likely to involve pure economic loss which has been less-commonly recoverable in tort. One criterion for determining whether economic loss is recoverable is the "foreseeability" doctrine.35 The economic loss rule is highly confusing and inconsistently applied36 and began in 1965 from a California case involving strict liability for product defects; in 1986, the U.S. Supreme Court adopted the doctrine in East River S.S. Corp. v. Transamerica Deleval, Inc.37 In 2010, the supreme court of the U.S. state of Washington replaced the economic loss doctrine with an "independent duty doctrine".38

Economic antitrust torts have been somewhat submerged by modern competition law. However, in the United States, private parties are permitted in certain circumstances to sue for anticompetitive practices, including under federal or state statutes or on the basis of common law tortious interference, which may be based upon the Restatement (Second) of Torts §766.39

Negligent misrepresentation as tort where no contractual privity exists was disallowed in England by Derry v Peek [1889]; however, this position was overturned in Hedley Byrne v Heller in 1964 so that such actions were allowed if a "special relationship" existed between the plaintiff and defendant.40 United States courts and scholars "paid lip-service" to Derry; however, scholars such as William Prosser argued that it was misinterpreted by English courts.40 The case of Ultramares Corporation v. Touche (1932) limited the liability of an auditor to known identified beneficiaries of the audit and this rule was widely applied in the United States until the 1960s.40 The Restatement (Second) of Torts expanded liability to "foreseeable" users rather than specifically identified "foreseen" users of the information, dramatically expanding liability and affecting professionals such as accountants, architects, attorneys, and surveyors.40 As of 1989, most U.S. jurisdictions follow either the Ultramares approach or the Restatement approach.40

The tort of deceit for inducement into a contract is a tort in English law, but in practice has been replaced by actions under Misrepresentation Act 1967.41 In the United States, similar torts existed but have become superseded to some degree by contract law and the pure economic loss rule.42 Historically (and to some degree today), fraudulent (but not negligent42) misrepresentation involving damages for economic loss may be awarded under the "benefit-of-the-bargain" rule (damages identical to expectation damages in contracts42) which awards the plaintiff the difference between the value represented and the actual value.42 Beginning with Stiles v. White (1846) in Massachusetts, this rule spread across the country as a majority rule with the "out-of-pocket damages" rule as a minority rule.42 Although the damages under the "benefit-of-the-bargain" are described as compensatory, the plaintiff is left better off than before the transaction.42 Since the economic loss rule would eliminate these benefits if applied strictly, there is an exception to allow the misrepresentation tort if not related to a contract.42