Economic Loss Rule in Florida: What It Means for Business Contract Claims

Since the Florida Supreme Court’s 2013 decision in Tiara, the rule applies only in products liability cases. It does not, by itself, bar a tort claim between parties to a contract.

If your business lost money because a supplier, contractor, or partner didn’t perform, you’re probably weighing which claim fits. That is the core of any economic loss rule Florida contract claim question. This page walks through the rule in plain terms.

Ayala Law PA focuses on business litigation, including commercial litigation, contract disputes, shareholder disputes, construction litigation, real estate litigation, and international trade litigation. The firm’s office is at 1646 W Snow Ave in Tampa. Eduardo A. Maura is the responsible lawyer for this page.

What the Economic Loss Rule Means in Florida

These are money losses, such as lost profits, that don’t come from physical injury or damage to other property. The rule asks whether that loss belongs in a contract claim or can be pursued in tort.

The answer affects your business. A contract claim and a negligence or other tort claim can lead to different damages and different arguments. Knowing which theory fits helps you see what you can pursue.

The rule was narrowed in 2013. A claim that looked blocked under older descriptions may now be open. Older articles often repeat the broader version, so be careful about what you rely on.

For a broader look at how these disputes work, read our Florida contract disputes guide.

Economic Losses Versus Physical Injury and Property Damage

Purely economic loss is money lost without physical injury or damage to other property. It includes lost profits, delay costs, and the cost to repair or replace the defective product or work itself.

Physical injury and damage to other property are different. If a product or job hurts someone or damages something beyond itself, the loss is no longer purely economic.

Two business examples show the difference:

• A supplier sells a machine that fails, and the shop loses three weeks of production. The lost sales are economic loss. If the same machine starts a fire that damages the building, the building damage is damage to other property.
• A subcontractor’s faulty framing delays a commercial project. The delay costs and the cost to tear out the bad framing are usually economic losses.

Sales of goods fall under Florida’s Uniform Commercial Code chapter. Fla. Stat. § 672.102 says the chapter “applies to transactions in goods.” So whether a deal is a sale of goods is an early question. The category often decides which rules and which claims are in play.

How Florida Courts Applied the Rule to Contract Disputes Before 2013

For a business, the result could be a narrower set of remedies. A company that believed a partner misled it to win the deal might still have been pushed back into the contract’s terms.

This history explains why the 2013 change matters. The rule’s reach shrank, and the questions changed with it. Next, we look at what the Florida Supreme Court decided.

The 2013 Tiara Decision and the Narrowed Scope of the Rule

In Tiara Condominium Ass’n v. Marsh & McLennan Cos., the Florida Supreme Court held that the economic loss rule is limited to products liability cases. The decision was issued March 7, 2013. You can read the Tiara Condominium opinion directly.

The practical effect is clear. The rule no longer works as a general bar to tort claims. Under Tiara, the rule alone does not bar a tort claim between parties who have a contract with each other.

The decision did not make contracts irrelevant. A tort claim still has to stand apart from the contract. The contract’s terms, the facts, and the specific duty alleged all matter. Those questions are covered in the next section.

When a Tort Claim Can Proceed Alongside a Contract Claim

A tort claim can sit alongside a contract claim when the tort is independent of the contract. The Third District Court of Appeal restated this principle in 2025. A plaintiff generally may not recover in tort for a contract dispute unless the tort is independent of the breach. See the Frutafino v. Dole Chile opinion.

Frutafino discusses the common law principle that a plaintiff may not recover in tort for a contract dispute unless the tort is independent of any breach of contract (Frutafino opinion). Those claims were not independent of the contract dispute.

Courts tend to ask a few questions. Does the duty allegedly broken exist apart from the contract’s promises? Or does the claim just repeat a promise the contract already covers?

Many businesses label every breach as fraud, hoping a tort label changes the analysis. It usually doesn’t. The facts behind the label decide the question. The rule that applies to your case depends on the facts and the court where the case is filed.

Exceptions to the Economic Loss Rule

The clearest limit after Tiara is the products liability scope. The rule itself applies in products liability cases. Outside that setting, it does not, by itself, bar a tort claim between contracting parties.

Fraud is the area that draws the most attention. Frutafino also addresses promises of future action: if the plaintiff can demonstrate that the person promising future action does so with no intention of performing or with a positive intention not to perform, such a promise may also constitute a fraudulent misrepresentation (Frutafino opinion). But a promise of future action can be fraud if the person making it had no intention of performing, or a positive intention not to perform, when they made it.

Unjust enrichment is different. Under Williams v. Johnson, where an express contract covers the same subject matter, claims arising from that contract won’t support an unjust enrichment claim. Read the Williams v. Johnson opinion for the full discussion.

These categories are general. Each claim is judged on its own facts, and fraud claims often overlap with contract claims, so they deserve close review.

The 51% Rule Is a Separate Concept

Readers often search for the 51% rule and the economic loss rule together. They answer different questions.

The economic loss rule asks whether a tort claim may be brought for a money loss between contracting parties.

A single lawsuit can raise both issues. Keep them apart in your mind. One question is whether the claim type is allowed. The other is how much blame each side bears. This page covers only the first question.

Construction and Professional-Services Contracts

Construction disputes raise the same core question. Is the claim about the contract, or about a duty that exists apart from it? Common disputes include a contractor and subcontractor disagreeing over defective work, delay damages, or payment.

Because Tiara limits the rule to products liability cases, the rule alone does not bar a tort claim between parties to a construction contract. The real question becomes whether the claim stands independent of the contract, as discussed in Frutafino.

Lien issues follow their own track. Lien foreclosure and construction contract fraud claims have their own requirements, so the economic loss question is one issue among several.

Similar questions can come up in service agreements, such as design or consulting contracts. Each contract turns on its own terms.

Related Contract Issues That Often Arise With Economic Loss Claims

These issues sit beside the economic loss analysis. They don’t replace it.

Notice is one of the most important. For goods a buyer has accepted, Fla. Stat. § 672.607 requires the buyer to notify the seller of a breach within a reasonable time after discovering it, or should have discovered it. Otherwise, the buyer may be barred from any remedy. Waiting can cost a claim.

Implied warranties matter too. Under Fla. Stat. § 672.314, unless excluded or modified, a warranty that goods are merchantable is implied when the seller is a merchant for goods of that kind. Certain wording can exclude these warranties. Fla. Stat. § 672.316 covers that exclusion, including “as is” language.

Other topics often come up in the same dispute. Read about waiver and course of dealing, prejudgment interest on contract judgments, and force majeure and hurricane-related performance. Each one shapes the case in its own way.

Talk Through Your Business Contract Dispute With Ayala Law PA

If a supplier, contractor, or partner stopped performing, your business may be absorbing the loss right now. You may be trying to work out which claim fits. Some readers are researching for a company they co-own or manage.

Ayala Law PA focuses on business litigation, commercial litigation, contract disputes, shareholder disputes, construction litigation, real estate litigation, and international trade litigation in Florida courts and arbitration. The firm represents businesses in Tampa Bay and Hillsborough County from its Tampa office. Eduardo A. Maura is the responsible lawyer for this page. A matter may be referred to another lawyer or firm when that fits the facts better.

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