Restatement of the Law Third, Torts: Liability for Economic Harm, completes the fourth installment of the Restatement Third of Torts. This Restatement, for which Dean Ward Farnsworth of the University of Texas at Austin School of Law served as Reporter, covers four principal areas of tort law: unintentional infliction of economic loss, liability for fraud, interference with economic interests, and misuse of legal procedure.

Recovery in tort for economic loss has been a growth area in American law over the last few decades. There has been a lot of judicial commentary on when it ought to be possible to recover in tort for a pure economic loss. In an effort to produce a comprehensive treatise on this developing area of law, this Restatement tackles issues that arise at the line between tort and contract. It establishes rules for determining if recovery in tort is available when two parties may have had a contract or could have made a contract but did not.

In addition to updating the economic torts covered in the Restatement Second, this Restatement addresses some topics not covered in prior Restatements and captures the best insights of judicial and scholarly commentary on the topic while staying true to developments in case law. For example, the expression “Economic-Loss Rule” was not used very often in the 1970s, when the Restatement Second of Torts was completed, but is now a regularly used phrase. For that reason, this Restatement includes new Sections on the economic-loss rule outside the area of products liability, exceptions to the economic-loss rule, bad-faith breach of contract as a tort, and the application of principles of comparative responsibility to economic torts.

The Restatement of Torts is nearly as old as The American Law Institute. Upon its incorporation in 1923, the Institute selected four areas of law that our founders believed could benefit the most from ALI’s guidance: Agency, Conflict of Laws, Contracts, and Torts. The Restatement of Torts quickly became one of ALI’s most popular resources for courts and scholars alike.

With Francis H. Bohlen as Reporter (joined by other Reporters for various portions of the Restatement), the Restatement of the Law, Torts, was published, in four volumes, from 1934 to 1939. Work on a revision began in 1955. The Restatement Second of Torts was published as a four-volume set, with the first two volumes published in 1965, and the third and fourth volumes published in 1977 and 1979, respectively. William L. Prosser, and later John W. Wade, served as Reporters for the Restatement Second, which took a quarter of a century of effort to order, articulate, and appraise the content of this substantial, constantly developing, and fascinating area of law.

When the time came for the Restatement Third of Torts, however, the ALI made the decision to divide the Restatement into separate components of tort law. The first component addressed in the Restatement Third was Products Liability, recommended by ALI Director Geoffrey C. Hazard Jr. in 1991 and published in 1998. The Institute also has completed volumes covering Apportionment and Liability for Physical and Emotional Harm.

Additional projects that are currently underway in the Restatement Third of Torts include: Defamation and Privacy; Intentional Torts; Property Torts, which is also being undertaken as part of the Restatement Fourth of Property; Remedies; and Concluding Provisions. The conclusion of these five projects will mark the completion of the Restatement of the Law Third, Torts—a body of work that will have nine components and will supersede the Restatement Second of Torts.

In the below video, Reporter Ward Farnsworth talks about the development of the Economic Loss Doctrine, a topic addressed in Restatement Third of Torts: Liability for Economic Harm.

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Ward Farnsworth

Reporter, Restatement of the Law Third, Torts: Liability for Economic Harm

Ward Farnsworth is Dean and John Jeffers Research Chair of the University of Texas School of Law. He taught for fifteen years at Boston University School of Law, where he also served as Associate Dean for Academic Affairs. Dean Farnsworth is author of Restitution: Civil Liability for Unjust Enrichment, The Legal Analyst, and Farnsworth's Classical English Rhetoric. He served as a law clerk to Anthony M. Kennedy, Associate Justice of the United States Supreme Court, and to Richard A. Posner, Chief Judge of the United States Court of Appeals for the Seventh Circuit. He has also served as Legal Adviser to the Iran-United States Claims Tribunal in The Hague.

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