Economic Loss Rule - Very Important Decision
January 2005

On January 19, 2005, the Pennsylvania Supreme Court issued a landmark decision on the Economic Loss Rule in the case Bilt-Rite Contractors, Inc. vs. The Architectural Studio, 782 A2d 1049.

The Contractor sued the Architect on a project for negligent misrepresentation in the Architect's plans for a public construction contract. The Trial Court and the Superior Court found that there was no privity of contract, therefore, the Contractor could not maintain an action against the Architect. The Pennsylvania Supreme Court overruled this Decision and said that the Contractor can sue the Architect for the misrepresentations in the Architect's plans even though there was no privity of contract between the Contractor and the Architect. This is an important decision for all those companies involved in construction and in other areas of business where a company was prevented from suing a third party because there was no privity of contract between the two companies. The Pennsylvania Supreme Court has now opened the door to this type of action which is new to the Commonwealth of Pennsylvania.