## Facts

- Charterers/owners of four oil-transporting supertankers purchased vessels equipped with main propulsion turbines designed and manufactured by Transamerica Delaval Inc.
- After delivery, the turbines on all four ships malfunctioned due to alleged design and manufacturing defects.
- The malfunctions damaged only the turbines (the product itself); there were no personal injuries and no damage to other property.
- The plaintiffs sought damages for repair costs and lost income while the ships were out of service.
- The plaintiffs filed an admiralty complaint asserting tort-based products-liability claims.

## Issues

1. Whether federal maritime (admiralty) law recognizes products-liability theories, including strict liability, for defective ship equipment.
2. Whether a commercial purchaser may recover in admiralty tort (negligence or strict products liability) for purely economic loss when a defective product injures only itself.

## Decision

- The Supreme Court unanimously affirmed judgment for the manufacturer.
- The Court held that admiralty law incorporates products-liability principles, including strict liability.
- The Court held that no tort claim lies in admiralty for purely economic loss when the defect causes damage only to the product itself.
- The Court noted that one count should have been dismissed for lack of standing by a charterer, but the remaining tort counts fell within admiralty jurisdiction.

## Legal Principles

- Federal maritime law recognizes negligence and incorporates products-liability doctrines, including strict products liability.
- In a commercial transaction, when a defective product damages only itself and the plaintiff claims only economic losses (e.g., repair costs and lost profits), the claim sounds in contract/warranty rather than tort.
- A manufacturer in a commercial relationship owes no duty under negligence or strict products-liability theories to prevent a product from injuring itself.
- The line between tort and contract in product-defect cases turns on the type of harm: personal injury or damage to other property may support tort remedies, while product self-damage and loss of bargain are left to contract and warranty allocations of risk.

## Conclusion

The Court held that although maritime law recognizes strict products liability, commercial plaintiffs cannot use tort theories to recover purely economic losses arising from a defective product that harms only itself; such disputes are governed by contract and warranty remedies.


East River S.S. Corp. v. Transamerica Delaval Inc., 476 U.S. 858 (1986)