The law of negligence has often limited the kind of losses that can be recovered. One of the areas where the law tends to place such limitations is the recovery of pure economic losses arising from negligent actions of others. Virtually all Western legal systems have mechanisms in place to limit the recovery of such losses. Absence of foreseability and pragmatic policy considerations are some of the mechanisms used to limit the recovery of pure economic losses in situations of negligence in many jurisdictions (Paris i et al, 2005). The present research project investigates how the United States law on Negligence deals with the issue of pure economic losses.
Law has often been used to guide the allocation of resources in any society. Tort law generally and the law of negligence in specific has acted as a means for the allocation of resources in circumstances where one party has acted in a manner that falls below what is expected of them with regards to some duty that they owe to the society. The law of negligence has often insisted that should a loss arise from such a failure to observe a duty owed to others, the party in breach should be made to make good their breach. That law of negligence has however been hesitant to allow for the recovery of losses which are purely economic in nature. The aim of this paper is to present critical analysis of how the U.S law of negligence treats this subject of pure economic losses given the huge sums of money that are sometimes involved in litigations concerning negligence matters.
Few difficulties are presented in those cases where economic losses stem from some intentional is caused to the defendant by the tortfeasor. This may happen for example in those situations where battery has been committed on the person of the defendant. The situation only becomes difficult in those cases where the loss claimed is purely economic in nature. It is in such circumstances where the U.S law has insisted on that the loss must be parasitic to some recoverable harm for it to be recoverable (Gruning, 2006).
Answers to some of these questions are expected to come out by the end of this research project. First, an answer as to what is the treatment of pure economic losses in the U.S law of negligence will need to be provided. Secondly, a question as to the relevance of that treatment will also be answered. Lastly, it will be answered as to whether that system of treatment is in need of any reforms and the nature of such reforms.
Justification for the Research
Reports coming from litigations in the U.S courts have tended to point towards a trend where negligence lawsuits are being compared to lotteries where lawyers are accused of selecting a suitable combination of plaintiff and defendants with an aim of getting the most out of a lawsuit (Hyman’s & Silver, 2006). Some of the allegations against this trend have claimed that litigants have often claimed for the recovery of losses that may at best be described as purely economic in nature thereby not meriting recovery in negligence. There are several works that have been done on this issue that one may question whether there is any need to write another paper on the issue. The present project can however be justified on two main grounds.
For one, the works that have so far been done can not be taken to have fully addressed the topic. The present paper should therefore be seen as a step forward in addressing those gaps that the available literature might not have tackled. The second justification arises from the author’s interest in the subject of discussion. As an ardent of observer of the interaction between law and policy, the author feels that this topic is an ideal setting in which such an interaction can be seen.
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