The rule confines parties to contract remedies where the loss is economic rather than personal injury or property damage. Application to data breach claims varies, with some courts finding an independent duty and others applying the bar.
Contractual relationships strengthen the bar.
Alternative Names:
Data Breach Economic Loss|Economic Loss Doctrine (Privacy)
Why it Matters?
The rule is most effective where a contractual relationship exists between the parties, since the argument that the contract allocated the risk is strongest there, which makes customer breach claims more susceptible than employee claims. Courts recognizing an independent duty to safeguard data circumvent the rule entirely. Confirming the jurisdiction's position before building the defense strategy is necessary since the split is sharp.
Frequently Confused with
Related terms
Frequently asked questions
When is the rule most effective?
What circumvents the rule?
