What is an "economic injury"?

In tort law, an “economic injury” is an injury done to someone’s ability to make money from a certain business arrangement. It may also be an injury to someone’s expectation that a certain business arrangement will make money, or to someone’s chance to enter a business arrangement that might make money. Unlike a personal injury or injury to property, an economic injury results in damage solely to someone’s money-related interests.

There are four main categories of economic injury torts: fraud, tortious interference, conspiracy, and restraint of trade.

In a fraud case, the plaintiff generally claims that the defendant either deliberately gave false information, deliberately misrepresented the information, or deliberately kept important information to himself in order to induce the plaintiff to enter or avoid a business relationship, with the result that the plaintiff lost money by following the defendant’s ingenuous lead.

Tortious interference cases usually come in one of two forms: tortious interference with a contract and tortious interference with a business relationship. The primary difference is that, in the first one, a contract actually exists between the plaintiff and a third party, while in the second, the contract does not yet exist or has expired. A tortious interference case claims that the defendant interfered with the relationship between the plaintiff and a third party such that the plaintiff lost a valuable economic opportunity, and that therefore the defendant should be liable for the loss.

A restraint of trade case is more commonly known as an “antitrust” case. In a restraint of trade case, the plaintiff claims that she lost money or an economic opportunity because the defendant used unfair trade practices like boycotting or price-fixing. Restraint of trade is usually based on a specific state law that prohibits unfair economic behavior.

Conspiracy claims in tort cases usually argue that the defendant did not commit fraud, tortious interference, or restraint of trade alone, but that he had help from one or more parties. These parties may or may not be listed as defendants in the same or a separate tort complaint.

In addition, plaintiffs often seek damages for economic losses such as the decrease in value of real estate due to defective buildings or the decrease in value of a piece of machinery due to a defective part.

In some states, a plaintiff who has been harmed by a scam, a Ponzi scheme, or insider trading may attempt to sue those who ran or benefited from the scheme. However, most U.S. civil cases that deal with unfair economic schemes are brought by the U.S. Securities and Exchange Commission, or SEC.

The question of whether purely economic losses can be recovered in a tort case has been part of tort and personal injury law since the very beginning. The first “official” tort case was a Scottish case called Donoghue v. Stevenson. In this case, Mrs. Donoghue ordered a bottle of ginger beer at a local pub. Midway through drinking her ginger beer, she discovered that the bottle also contained a partially decomposed snail.

The court recognized that Stevenson, the company that bottled the ginger beer, should be held responsible for its negligence in failing to make sure snails stayed out of its products, and that it should therefore repay Mrs. Donoghue the costs of the illness that resulted from her drinking most of the ginger beer.

However, the court refused to hold Stevenson liable for the cost of the ginger beer itself, even though Mrs. Donoghue arguably suffered an economic loss by losing the ability to enjoy the rest of her purchase. The court drew a line between costs that were caused by the negligence, such as illness, and costs that were part of the negligence itself, such as the price of the ginger beer. This rule on economic loss was followed for several decades before courts began to hold defendants liable for purely economic damages, even when personal injury or injury to property was not involved.

Economic injuries should not be confused with economic or compensatory damages, which are damages whose exact amounts can be established with bills, receipts, and similar financial records. Economic damages are available in nearly all tort cases, and are frequently paid in the form of medical bills, payments for lost wages, and payments to repair or replace damaged property.

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