Banks sued Schnucks grocery chain after a 2012 data breach exposed 2.4 million credit and debit cards, costing banks millions in fraud losses and card reissuance. The appeals court ruled that banks cannot sue for economic losses from the breach because they have contractual relationships with Schnucks that already allocate risk and provide remedies. The court held that tort law should not override existing contracts between parties in a commercial network. For subcontractors, this means courts will enforce contract terms that limit liability rather than allowing additional lawsuits for indirect financial harm.
If your contract with a general contractor or client includes indemnification and insurance clauses, courts will enforce those terms and reject separate tort claims for economic losses
Make sure your subcontracts clearly allocate risk and specify who bears costs for breaches, data loss, or other incidents—vague contracts invite litigation
Broad indemnification and flow-down clauses in your contracts are enforceable; use them to protect yourself from downstream claims