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23 Tex. Tech. L. Rev. 477 (1992)
Negligence, Breach of Contract, and the Econimic Loss Rule

handle is hein.journals/text23 and id is 495 raw text is: NEGLIGENCE, BREACH OF CONTRACT, AND THE ECONOMIC LOSS RULE by William Powers, Jr.* & Margaret Niver** I. INTRODUCTION ..................................................... 477 II. THE EcoNo~ic Loss RULE ................................ 480 A. The Basic Rule ............................................. 480 B. The Duty of Good Faith and Fair Dealing ........ 489 C. Professional Malpractice and Negligent Misrepresentation .......................................... 493 D. Summary ..................................................... 497 III. SCHARRENBECK AND ITS PROGENY ........................... 498 IV. SouT wEsTERN BELL TELEPHONE Co. v. DELANNEY AND A SUGGESTED APPROACH ................................. 515 V. CONCLUSION ........................................................ 520 I. INTRODUCTION Texas law is murky, to say the least, on the question of whether a plaintiff can recover under a tort theory (rather than merely a contract theory) for economic consequences of negligence during a defendant's performance (or non performance) of contractual ob- ligations. This issue has important practical consequences, such as whether a plaintiff can recover punitive damages in a dispute with a contracting partner or can recover in the absence of contractual privity.' This issue also has important theoretical consequences for understanding the intersection of tort law and contract law. The * Hines H. Baker and Thelma Kelley Baker Chair in Law, The University of Texas School of Law; B.A., 1967, University of California at Berkeley; J.D., 1973, Harvard Law School. ** B.A., 1988, University of Virginia; J.D., 1992, The University of Texas School of Law. We would like to thank Mark Yudof, James Wilson, Mark Gergen, and Basil Markesinis for many helpful suggestions and insights. 1. For example, can a subcontractor on a construction project recover for economic loss caused by a delay due to the project manager's negligence in performing its contract obligations to the general contractor? See, e.g., Bernard Johnson, Inc. v. Continental Constructors, Inc., 630 S.W.2d 365 (rex. App.-Austin 1982, writ ref'd n.r.e.); infra text and accompanying notes 200-14.

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