Economic Loss Rule in Florida Business Litigation

Since 2013, the Florida Supreme Court has said the rule applies only in products liability cases. That makes its reach narrower than many business owners expect. This page explains the rule in plain terms, using the Florida decisions behind it.

What the Economic Loss Rule Means for Florida Businesses

The rule comes up most often when two businesses dealt with each other under a contract or commercial deal. The injured party may then frame its claim as negligence, and the other side responds with the rule.

This page is most useful for:

• Business owners and partners facing a tort claim, or a defense built on the rule.
• Contractors and subcontractors in payment or defect disputes.
• Sellers and commercial parties whose deal went wrong.

The wording matters. The same facts can support a contract claim, a tort claim, or both. The label a claim carries affects which path stays open.

Where the Rule Stands After Tiara

The Florida Supreme Court limited the rule to products liability cases in Tiara Condominium Ass’n v. Marsh & McLennan Cos.. The court held that the application of the economic loss rule is limited to products liability cases.

That ruling means a claim outside a product setting is not automatically barred by the rule. Lawyers still argue how far Tiara reaches in business and construction disputes. Courts decide each case on its own record.

If someone cites the rule against your business, ask two questions. What kind of case is it, and what did the cited decision actually hold?

How the Rule Plays Out in Contract and Construction Disputes

The rule’s effect turns on how the claim is framed and whether the parties had a contract. Each type of dispute raises a different question.

• Contract claims. A claim for unpaid or defective work starts with the contract’s terms. Florida courts apply basic contract rules to oral deals too. An oral contract needs an offer, an acceptance, consideration, and enough detail on the essential terms, as stated in St. Joe Corp. v. McIver.
• Negligence claims against a party with no contract. These raise a separate question. Defendants often raise the rule in this setting.
• Construction disputes. A contractor or subcontractor fight over delayed payment or defective work usually turns on the contract and on what each side did. Payment and lien issues in these cases follow the same framing questions.
• Commercial deals. A business partner’s careless performance can cause purely financial losses. Whether a tort claim fits depends on how the harm is described and what the contract covers.

Exceptions and the Independent Tort Doctrine

A tort claim can survive the rule when it stands apart from the contract breach. Florida courts test this point claim by claim.

The Third District Court of Appeal has said a plaintiff may not recover in tort for a contract dispute unless the tort is independent of any breach of contract, as in Frutafino, S.A.S. v. Dole Chile, S.A.. Florida courts apply a common law principle, discussed in Frutafino, S.A.S. v. Dole Chile, S.A., that a plaintiff may not recover in tort for a contract dispute unless the tort is independent of any breach of contract.

A promise of future action can still support fraud if the person making it had no intention of performing, or a positive intention not to perform. The same Frutafino, S.A.S. v. Dole Chile, S.A., 405 So. 3d 497 (Fla. 3d DCA 2025) decision quotes Mejia v. Jurich, 781 So. 2d 1175, 1177 (Fla. 3d DCA 2001), on promises of future action.

Business claims involving customers also have limits. A business may sue for interference with its present or prospective customers. It has no claim for interference with its relationship to the community at large, under Ozyesilpinar v. Reach PLC.

Lost Profits and the Damages Question

Lost profits are income a business says it would have earned without the other side’s conduct. They often become the hardest part of a case once a claim gets past the rule.

Records that support lost profits commonly include:

• Financial statements and tax filings.
• Signed contracts and purchase orders.
• Past revenue and expense records.
• Documents showing the specific deal or customer that was lost.

Estimates tied to a specific deal are usually easier to test than broad forecasts. A business that expected a wide recovery may find the claim narrower once the defense is raised. Build the damages record early.

How a Case Involving the Rule Usually Moves Forward

A case with this issue usually moves through four stages. The order can shift with the facts.

1. Review. Look at the contract, the communications and the performance records to see which claims exist.
2. Map the claims. Sort them into contract theories, tort theories and any independent tort. Test each one against the rule.
3. Expect an early challenge. The defense often raises the rule through a challenge to the pleadings or a motion. That step can narrow or end some tort claims.
4. Build damages. If claims survive, develop the damages record, including lost profits proof.

Timing also matters for rescission, which is undoing a contract. Under Flaherty v. Flaherty, a party entitled to rescind a voidable contract may lose that right by failing to act after learning the facts. In Flaherty v. Flaherty, the court stated that ratification occurs when a party entitled to rescind a voidable contract fails to do so after the discovery of facts that warrant a rescission.

Why Ayala Law PA Handles These Disputes

Ayala Law PA focuses on business litigation, including the commercial, contract and construction disputes covered on this page. The firm handles these matters in Florida courts and arbitration.

• Practice areas: business litigation, commercial litigation, contract disputes, shareholder disputes, construction litigation, real estate litigation and international trade litigation.
• Responsible lawyer for this page: Eduardo A. Maura. Our lawyers and support staff work on these matters.
• Office: 1646 W Snow Ave, Tampa, Florida. The firm serves businesses in Tampa, Hillsborough County, Brandon, Riverview, Plant City, Temple Terrace and the wider Tampa Bay area.
• Fees: Fees and costs depend on the facts of each matter.
• Outcomes: No outcome can be promised in any dispute.

Frequently Asked Questions