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No Tort Recovery For Negligent Design, Even Where There's No Contract

Tuesday, July 03, 2012 08:00 am

 

Generally, you cannot recover in tort for purely economic loss--that's a matter properly handled via contractual remedy. The rule applies to costs incurred due to defective design. Even where there's no owner-designer contract privity, owners will have a tough time suing for negligence since parties involved in commercial transactions have the opportunity to limit their exposure to liability through contracts.

Hawaii: You can't disrupt contractual relationships

The Hawaii Supreme Court ruled that recovery for economic loss in negligence is barred, even in the absence of contract privity, "when allowing such recovery would blur the distinction between contract and tort law." Association of Apartment Owners of Newtown Meadows ex rel. its Board of Directors v. Venture 15, Inc., 115 Haw. 292, 167 P.3d 285 (2007).

In Association, a condominium association without privity sued a subcontractor for constructing defective concrete slabs on a condominium project. The court concluded that "imposing a tort duty upon the subcontractor correlative to the contract's specifications 'would disrupt the contractual relationships between and among the various parties.'" See Plourde Sand & Gravel Co. v. JGI Eastern, Inc., 154 N.H. 791, 917 A.2d 1250, 1256-57 (N.H. 2007).

South Carolina: Exception where there's a breach of non-contractual duties

An exception to this rule ar[...]

 
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