Pure economic loss contract law refers to a legal principle that deals with the recovery of damages resulting from economic loss that is not accompanied by any physical injury or damage. In other words, it deals with claims for monetary loss suffered by a party as a result of a breach of contract by another party.
The principle of pure economic loss contract law is often invoked in cases where a party has suffered financial loss due to a breach of contract by another party. Typically, a breach of contract occurs when one party fails to fulfill their obligations under the terms of the agreement. This can lead to monetary losses for the other party, and they may seek compensation for these losses.
The legal concept of pure economic loss contract law is grounded in the principle of privity of contract. This principle holds that only parties to a contract can sue and be sued under that contract. This means that if a person suffers a loss that is purely economic, and they are not a party to the contract, they cannot recover damages.
However, there are exceptions to the principle of privity of contract. For example, a third party may be able to sue a contracting party if they are a beneficiary of the contract. In such cases, the third party must show that they were intended beneficiaries of the contract, and that the contracting parties intended to confer a benefit on them.
Another exception to the principle of privity of contract is where a duty of care arises outside of the contract. This can occur when a party owes a duty of care to another party based on a relationship or situation that exists between them. For example, a manufacturer may owe a duty of care to consumers who use their products, even if there is no contractual relationship between them.
In conclusion, pure economic loss contract law deals with the recovery of damages resulting from economic loss that is not accompanied by any physical injury or damage. While the principle of privity of contract generally limits recovery to parties to the contract, there are exceptions where third parties may be able to recover damages. These exceptions may arise when a third party is a beneficiary of the contract or when a duty of care arises outside of the contract.