It is important for contractors to have a basic understanding of the Economic Loss Rule and its exception. Generally, a construction contract sets forth within its specific language the rights, obligations, duties and potential liabilities between contracting parties. The failure of any party to perform within the parameters of the contract can lead to a breach of contract action. A contractor is also susceptible to tort liability to both the contracting parties and third parties. Tort liability can arise from a contractor’s negligent actions causing property damage or personal injury. The Economic Loss Rule generally states that a defendant in