Question

Critically discuss and apply contract and tort law in business circumstances;

Answer 1

A contract is an agreement between two or more people or entities that creates a legal duty or responsibility. Entities entering a contract might include individual people, companies, corporations and organizations, but there are a few conditions that must be met for the contract to hold water in the courtroom. Specifically, a legally enforceable contract must contain some key ingredients:

• Offer and acceptance
• Consideration
• A meeting of the minds regarding the legal subject of the contract (e.g., both parties intend on the purchase and sale of a car for an agreed price)
• Legal capacity (competency)

If either party breaches their duty to perform or obligations under the contract, contract law aims to provide damages to the injured party. Typically, damages for a breach of contract are awarded with the intent to compensate the non-breaching party for losses suffered as a result of the contract breach. Other damages that may be awarded in contract breaches include restitution, liquidated damages, nominal damages, rescission of the contract, or in some cases punitive damages may be awarded.

Tort law is another body of law that falls within the broader civil law umbrella, which covers violations where one person’s behavior or actions cause injury, suffering, unfair loss, or harm to another person. Tort law is based on the premise that people are liable for their actions, and is a very broad category of law that includes many different types of personal injury claims.

Similar to breach of contract damages, tort law aims to compensate victims for any injuries or losses suffered by the unreasonable acts of another, as well as discouraging the defendant from repeating the violation in the future.

Similarities

As noted above, both tort law and contract law are both branches of civil law in which a civil wrong is committed by one person, which results in injury or property damage to another person. Additionally, both frequently involve monetary compensation being paid to the injured party. Simply put, both contract laws and tort laws are in place to address a breach of duty that results in an injured party. As mentioned above, in contract law, this breach is known as a breach of contract. It occurs when one party fails to adhere to their duties outlined in a contract.

In tort law, a breach of duty involves the failure of one party’s duty to harm another. For example, the most common type of tort lawsuit is one that is based on a theory of negligence. In order to succeed in a lawsuit based on negligence, the injured party must prove that the defendant breached a duty of care owed to them, and that the breach was the cause of their injuries or losses.

How it is different

One major distinction between contract law and tort law lies in the issue of consent and agreement. As noted above, in order to recover in contract law, the injured party must show that there was a valid contract, and that the breaching party failed to meet their expectations under the contract.

This means that in contract law, both parties knowingly entered into an agreement without coercion, consenting to both the contract and its outcomes. However, in tort law, the injured party is generally not a consenting party to the actions taken by the wrongdoer. Typically, torts occur by the intrusion of one party on another that results in some type of harm. Additionally, in the case of torts, the duty that is violated is a duty that is imposed by law and owed to everyone. Whereas, in contract law, the duty violated is fixed from the consent of the parties and is only owed to the parties mentioned in the contract.

As for damages, in tort law, the measure for damages is not fixed or limited; however, the measure of damages in contract law are determined by the contract that was agreed to by the parties. This means that courts will award damages in a contract case based upon the contract agreed to by the parties, with the intention of restoring the injured party to where they were before the breach occurred.

In contrast, in a tort case, courts will award damages to compensate the victims for the harm or losses they suffered as a result of the defendant’s actions. Another major difference between tort and contract law, is that exemplary (punitive) damages may be awarded in tort cases, but they are rarely awarded in breach of contract cases.