Limitations on Liability for Economic Loss Caused by Negligence: A Pragmatic Appraisal
![handle is hein.journals/vanlr25 and id is 59 raw text is: Limitations on Liability for Economic Loss
Caused by Negligence: A Pragmatic
Appraisal
Fleming James, Jr.*
1. INTRODUCTION
Under the prevailing rule in America, a plaintiff may not recover
for his economic loss resulting from bodily harm to another or from
physical damage to property in which he has no proprietary interest.'
Similarly, a plaintiff may not recover for economic loss caused by his
reliance on a negligent misrepresentation that was not made directly to
him or specifically on his behalf.2 Thus, the insurer of A's life has no
action against one who negligently causes A's premature death;3 the
employer has no action for sums that he has had to pay because defen-
dant has negligently injured his employee;4 a ship's time charterer has
* Sterling Professor of Law, Yale University School of Law. B.A. 1925, LL.B. 1928, Yale
University. Advisor to Reporter, Restatement (Second) of Torts.
This paper is the outgrowth of a workshop held during July 1971 under the auspices of the
Institute of Advanced Legal Studies of the University of London. The workshop's subject was The
Law of Tort and Non-Physical Loss and was organized and chaired by Professor J.A. Jolowicz
of Trinity College, Cambridge. The author of the present article prepared a paper for and partici-
pated in the workshop as visiting professor at the Institute. This article is not the paper prepared
for the workshop, but is instead the product of the workshop. It draws heavily on thoughts from
other papers and from oral discussion, for all of which grateful acknowledgement is made.
I. Harper, Interference with Contractual Relations, 47 Nw. U.L. REV. 873, 884-93 (1953)
(concluding as a general rule, liability for negligent interference with contractual relations does not
exist); Comment, Foreseeability of Third Party Economic Injuries-A Problem in Analysis, 20 U.
CHi. L. REV. 283 (1953).
2. Ultramares Corp. v.Touche,255 N.Y. 170,174 N.E.441 (1931); I F. HARPER &F. JAMES,
LAW OF TORTS § 7.6 (1956) [hereinafter cited as HARPER & JAMES]; W. PROSSER, HANDBOOK OF
THE LAW OF TORTS § 107 (4th ed. 1971) [hereinafter cited as PROSSER].
3. Connecticut Mut. Life Ins. Co. v. New York & N.H.R.R., 25 Conn. 265 (1856).
4. Crab Orchard Improvement Co. v. Chesapeake & 0. Ry., 115 F.2d 277 (4th Cir. 1940)
(workmen's compensation payments); The Federal No. 2, 21 F.2d 313 (2d Cir. 1927) (expense for
care and cure of seaman); Chelsea Moving & Trucking Co. v. Ross Towboat Co., 280 Mass. 282,
182 N.E. 477 (1932) (workmen's compensation payments); Northern States Constr. Co. v. Oakes,
191 Minn. 88, 253 N.W. 371 (1934) (increased workmen's compensation insurance premiums). The
same rule is applicable in the field of public employment. United States v. Standard Oil Co., 332
U.S. 301 (1947); Employers' Liab. Assurance Corp v. Daley, 183 Misc. 975,51 N.Y.S.2d 567 (Sup.
Ct. 1944), affd, 271 App. Div. 662, 67 N.Y.S. 233 (1947), affd, 297 N.Y. 745, 77 N.E.2d 515
(1948); City of Philadelphia v. Philadelphia Rapid Transit, 337 Pa. I, 10 A.2d 434 (1940). See
Annot., 57 A.L.R.2d 802 (1958). Some states, however, allow a master to recover damages for in-
jury to his servants caused by defendant's negligence. Note 24 infra.](ViewImageLocal?handle=hein.journals/vanlr25&div=18&collection=&method=preview&ext=.png&size=3)
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Limitations on Liability for Economic Loss Caused by Negligence: A Pragmatic Appraisal
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