An Aside: The Relationship Between Negligent Misrepresentation and the Economic Loss Doctrine

This issue drives me nuts:  section 552 of the Restatement was designed to impose tort liability under narrow circumstances for economic loss caused by negligent misrepresentation and, by its terms, applies even when there is privity of contract between plaintiff and defendant.  (Indeed, some states hold there HAS to be privity for a 552 claim!).  Yet, some courts say that a 552 claim is barred by the economic loss doctrine, which is intended to police the boundary between contract and tort law.

The problem with this is that (a) 552 and (b) fraud and (c) other torts are narrowly crafted to be, in a sense, exceptions to ELD.  If ELD bars a 552 claim, it bars a fraudulent inducement claim.  That, of course, is silly, but why this issue persists, I don't know.  I wrote a paper about this years ago, never published. I wish I would have..

Rant done.

About David

Professor of Law, Mercer University School of Law. Formerly Of Counsel, Taylor English Duma, LLP and in 2012-13, judicial clerk to Chief Judge Rader.