this rationale imposed some limit on liability, a concern they sometimes mentioned. Their decisions may have been a product of that concern as well as the logical appeal of the rationale that they adopted. But it does not follow that they placed the limit on recovery where they did by consulting common sense or experience.

Having adopted that rationale in 1911, the courts adhered to it thereafter. To show that they had shifted back and forth between this rationale and a concern for remoteness, Justice Thesiger and Lord Denning only cited pre-Remorquage cases such as Cattle and Remorquage itself which only mentioned remoteness in the headnote, and cases which do not deal with pure economic loss but with physical harm occurring in some improbable way,124 or nervous shock on witnessing an injury to one’s child.125

It is an historical accident that rule was adopted at a time when the conceptualistic rationale for it seemed persuasive. To scrap the rationale and keep the rule as though it were the product of experience and common sense is to perpetuate the accident. I agree that there should be a limit on recovery in tort.126 The fact that this rule was adopted by accident does not prove that it sets the wrong limit. By coincidence, it might be the best rule from the standpoint of policy, common sense and experience. But that would be a remarkable coincidence.

Conclusion

As we have seen, the rule against recovery for economic loss was adopted in Germany and in England on the strength of an argument that would not be persuasive today. Indeed, three centuries earlier, jurists had shown what the matter was with such an argument in dealing with one that was different but equally conceptualistic. The rule was then preserved by the deference of German judges to the Civil Code and of English judges to precedent. Just as the way in which it was adopted should encourage us to re-examine the rule, the way in which it was preserved should encourage us to re-examine our ideas about the authority of codes and precedents. It is one thing to say that they should have

124Woods v. Duncan [1946] AC 410, 421 (submarine sunk due to an ‘extraordinary combination of circumstances’), cited by Thesiger, J in SCM [1970] 2 All ER 431.

125King v. Phillips [1953] 1 QB 429, cited by Lord Denning in Spartan Steel [1973] 1 QB at 36.

126I suggest a limit that cuts across the distinction between physical and merely economic harm in J. Gordley, ‘Contract and Delict: Toward a Unified Law of Obligations’, (1997) 1 Edinburgh Law Review 345.

authority. It is another to say that courts should defer to a rule founded on academic ideas, now discredited, in the minds of drafters and treatise writers long dead. The courts could instead take a critical and historical approach to their authorities. Otherwise they may find themselves deferring to a fossilized error.