Legal Definitions - damage rule

The damage rule, also known as the legal-injury rule, is a fundamental principle in law that requires a person bringing a lawsuit (the plaintiff) to demonstrate that they have suffered a concrete, legally recognized harm or injury. It is not enough to simply feel wronged, inconvenienced, or to experience a setback; the harm must be one that the law acknowledges and provides a potential remedy for. Without such a legally recognized injury, a court typically cannot hear the case or provide a remedy, as there is no legal basis for the claim.

• Example 1: Competition and Business Loss

  A small, independent bookstore has been operating successfully in a neighborhood for many years. A large national chain bookstore then opens a new location directly across the street. As a result, the independent bookstore experiences a significant drop in sales and revenue, leading to financial hardship. While the owner of the independent bookstore feels harmed and is suffering financially, this situation generally does not involve a legal injury under the damage rule. The new chain store is operating lawfully, and competition, even if detrimental to an existing business, is not typically a legal wrong that can be sued over. Therefore, the damage rule would prevent a lawsuit based solely on lost profits due to legitimate business competition.

• Example 2: Personal Injury from Negligence

  A cyclist is riding their bike responsibly when a driver, distracted by their phone, fails to stop at a red light and collides with the cyclist. The cyclist suffers a broken arm, requires surgery, incurs substantial medical bills, and is unable to work for several months, losing income. In this scenario, the cyclist has suffered clear legal injuries: physical harm, medical expenses, and lost wages, all directly caused by the driver's negligence (a legally recognized wrong). The damage rule is satisfied, allowing the cyclist to sue the driver for compensation for these damages.

• Example 3: Breach of Contract with Financial Loss

  A catering company enters into a contract with a client to provide food and service for a large corporate event on a specific date. Two days before the event, the catering company unexpectedly cancels, citing staffing issues. The client is forced to find a last-minute replacement caterer at a much higher cost and also incurs additional expenses for expedited delivery of supplies. Here, the client has suffered a legal injury in the form of financial losses (the increased cost of the replacement caterer and additional expenses) due to the original catering company's breach of contract. The damage rule allows the client to sue for these damages because a breach of contract resulting in quantifiable financial harm is a legally recognized injury.