A Comparative Study of "Economic Loss" and "Loss of Profit"

Abstract

Economic Loss is a term in common law that is used in cases of imposition of expenses on the claimant or loss of his/her expected profit and is placed against physical injury or damage to his/her tangible property. In common law, to express this kind of damage in breach of contract, the terms "reliance loss" and "expectation loss" are prevalent. In the tort law of common law, "economic loss" arising from intentional acts principally is compensable providing the establishment of some conditions, but in cases of "negligence", compensation for "economic loss" is conditional upon the claimant having suffered physical injury or physical damage to his/her tangible property of the claimant which is called Consequential Economic Loss. Otherwise, such damage is called "pure economic loss" and it is not compensated in principal. The analogous notion of "economic loss" in Iranian law which could be the basis for a comparative study is the jurisprudential term of "loss of profit". In this article, through a descriptive-analytic method, the common law notion of "economic loss" is introduced and the limitations and conditions for compensation for such damage are expressed. In addition to comparing this concept with "loss of profit", the position of Iranian laws and various jurisprudential opinions in this regard would be analyzed.

Keywords

• economic loss
• consequential economic loss
• pure economic loss
• loss of profit
• civil liability