This article has been written by Sameera Khan from Amity Law School, Noida 

INTRODUCTION

Tort and contract are two of the most commonly used legal terminology. Civil wrongs include both contracts and torts. However, if the parties’ acts constitute a crime, both of them may result in criminal prosecution. The fact that they can both be penetrated is another resemblance between the two. A party may be sued for breach of contract when they violate the terms of the agreement. A party may be sued for damages when they commit a tort. Contracts and torts are made through agreement. A contract is an agreement that establishes duties between two or more parties. An implicit agreement exists in a tort when two parties agree not to take any action that could endanger the other. Although they both deal with legally binding agreements, they differ in several aspects.

In most circumstances, the difference between tort and contract is determined by consent. Both parties agree to the conditions of the agreement in a contract. In a tort, one party is accused of failing to perform an obligation owed to another without agreement.

TORT

A tort is a civil wrongdoing that one individual can inflict upon another, without the necessity of any prior relationship between the parties. Legal action can be initiated when one party breaches a duty owed to the other.

Salmond defined tort as “a civil wrong for which the remedy is a common law action for unliquidated damages and which is not exclusively the breach of a contract or the breach of a trust or other merely equitable obligation.“

TYPES OF TORT

Torts can be broadly classified into three categories: strict liability, deliberate torts, and negligence.

Intentional torts: As the name implies, these are torts in which the plaintiff has been purposefully harmed by the defendant. You may be familiar with some examples of deliberate torts, such as violence, false imprisonment, and assault.

Negligence: Negligence is the most common type of tort. Damages are granted when the defendant breaches their duty of care to the plaintiff.

Torts with strict liability: In these situations, the defendant bears responsibility for the losses even in the absence of negligence. This usually applies when the defendant is involved in an activity that is harmful by nature.

CONTRACT

Salmond says, “A contract arises only out of the exercise of the autonomous legislative authority entrusted by the law to private persons to declare and define the nature of their mutual rights and obligations.”

Indian Contract Act, 1872 provides an exact definition of contract in Section 2(h), which states that “an agreement enforceable by law is a contract.” A contract refers to an agreement between two parties that establishes legally enforceable obligations. This agreement can be explicit or implied and may be either written or verbal.

The following factors must be present for a contract to be legally binding:

Offer: An offer must be presented by one party to another.

Acceptance: The terms of the offer must be accepted by the other party.

Consideration; both parties must exchange something of value, such as money, products, or services.

Capacity: Both parties must be of legal age and have the mental capacity to comprehend the conditions of the contract.

Legality: The contract’s conditions must not be illegal.

Most contracts involve formalities such as signatures. To be valid and enforceable, most contracts include formalities such as signing or exchanging money. However, in rare situations, the contract can be inferred from the parties’ behavior or statements.

DIFFERENCES BETWEEN TORT AND CONTRACT

DEFINITION

A wrongful act or omission that causes harm to another person or property is tort. A tort is an action for wrongdoing or carelessness that results in harm to people or property. Conversely, a contract is a legally binding agreement between two or more parties for a legitimate purpose and mutual consideration. The Duty is on the members of society whereas in contract, duty is on the parties themselves.

LEGAL BASIS AND PRIVITY

Torts is Based on common law or statutory law. Law of torts is not a codified law. It is a judge-made law.

The law of contracts, including provisions related to its breach, is codified and is Based on the terms of the contract itself.

The common law established by the court determines the rights and obligations in tort cases. It depends on the specifics, meaning it differs from instance to case. It also holds true in cases where the parties are strangers. the agreement that exists between the parties involved gives rise to contract law.

NATURE

A tort is the breach of a right in rem or the right vested in the general public. This is accessible to everyone on the planet. On the other hand, a right in personam is violated when there is a contract. It suggests that the right is accessible and enforceable against particular individuals.

DUTIES/OBLIGATIONS AND PARTIES INVOLVED

The plaintiff in a lawsuit is usually someone who has been harmed by the defendant’s actions. In contract disputes, the plaintiff is typically a party to the contract who has not received the agreed-upon benefits. In tort cases, the law defines or enforces duties and obligations, which are owed to the broader community. Conversely, in contract law, the duties and obligations are dictated by the agreement’s terms and the consent of the parties involved, binding only those parties. A third party can sue for a tort committed by the wrongdoer even without a contractual relationship between the injurer and the injured. However, under the principle of privity of contract, a third party cannot sue for breach of contract, with certain exceptions.

MOTIVE

In tort law, the motive is often taken into consideration. In contract law, proving motive is unnecessary as it is irrelevant to establishing a breach.

TYPES OF HARM

Torts can result in physical injury, emotional distress, or property damage. Contract breaches typically cause financial harm, such as lost income or profits.

MINORS

Minors can be sued in tort to recover damages from their property. In contrast, contract law typically offers minors a defense, as contracts with minors are generally void, and the estoppel rule does not apply.

MEASURE OF DAMAGES

In tort cases, claims are made for unliquidated damages, allowing the court to determine the amount. These damages aim to compensate the plaintiff for the harm suffered. In contract breaches, suits seek liquidated damages, pre-determined by the contract, to place the plaintiff in the position they would have been in if the contract had been honored.

PRIVITY

In contract law, only the parties involved in the contract can sue or be sued, a principle known as privity. In tort law, privity does not apply, as the harm occurs without the consent of the injured party, unlike in contract law, where parties are legally bound to each other.

REMEDIES

Tort remedies can include compensatory damages, punitive damages, and injunctive relief. Contract remedies may involve damages, specific performance, or contract cancellation. In tort cases, real, exemplary, unliquidated, or contemptuous damages may be awarded. In contract cases, real and liquidated damages are awarded.

REQUIREMENTS FOR LIABILITY

Contractual liability arises from breaching contract terms, while tort liability is based on breaching a legal duty owed to others. In tort, the plaintiff must show that the defendant’s actions or omissions caused harm. In contract cases, the plaintiff must prove the defendant failed to meet the contract terms.

EXEMPLARY DAMAGES

In tort cases, exemplary damages can be awarded depending on the case’s specifics. In contract law, monetary compensation is typically awarded, including general, special, or nominal damages. However, exemplary damages may be granted in exceptional cases, such as a breach of promise to marry or wrongful dishonor of cheques.

LIMITATION PERIOD

In tort law, the limitation period starts when the damage occurs. In contract law, it begins on the date the contract is breached.

A WRONG CAN BE BOTH TORT AS WELL AS BREACH OF CONTRACT

After the detailed reading, it is clear that tort and breach of contract are different from each other in many aspects, despite a few similarities. However, there are a few civil wrongs which can involve both tort as well as breach of contract. That is, in certain rare cases, both contractual liabilities along with tortious liability may arise from one event.

EXAMPLE – The owner of a cow A , delivered his cow to B for safekeeping, for which the latter agreed willfully. However, the cow died due to the non-feeding of food by B. Here, there is an element of negligence as well as breaking of his promise, which constitutes two civil wrongs, namely, the tort of negligence as well as breach of contract of bailment.

In the above example, even if there are two civil wrongs committed by the wrongdoer, an injured party can either sue the convict for the tort of negligence or for breach of contract, but not both simultaneously. This is because the remedy for both cases is the same, i.e., compensation and claim both together would be unjust enrichment. Hence, the injured party can apt one right over the other.

IMPORTANT CASE LAWS REGARDING DIFFERENCE BETWEEN TORT AND CONTRACT

Significant Legal Precedents Illustrating Distinctions Between Tort and Contract

Addis v. Gramophone (1909)

The case of Addis v. Gramophone (1909) stands as a pivotal example highlighting the differentiation between tort and breach of contract. In this instance, the court deliberated on the potential for awarding exemplary damages, emphasizing the circumstances under which such damages could be justified. The court underscored that a contract constitutes a specific type of agreement where legal duties and obligations are explicitly established between the parties involved. It affirmed that breaches of these contractual duties give rise to actions for breach of contract, where the enforcement and terms of the contract are central to the legal proceedings. For instance, actions such as wrongful dismissal of an employee are construed as breaches of contractual obligations rather than torts.

Lumley v. Gye (1853)

In the landmark case of Lumley v. Gye (1853), the concept of “inducement of breach of contract” was recognized as a distinct tort. This case exemplifies an intriguing scenario where the deliberate incitement of a breach of contract by the defendant, Gye, resulted in legal repercussions. The court held Gye accountable for interfering with the contractual relationship between Miss Wagner and the plaintiff, identifying such interference as the tort of inducing breach of contract. The ruling underscored the necessity for the plaintiff to demonstrate malicious intent on the part of the defendant to induce the breach. Moreover, the court established that any third party, irrespective of their contractual status, bears a legal duty to refrain from acts that maliciously lead to breaches of contract. This principle, rooted in public policy, emphasizes the legal obligation of individuals to respect and uphold contractual commitments, particularly in cases involving personal service agreements.

CONCLUSION

In conclusion, tort and contract are distinct legal concepts, each serving specific purposes within the realm of civil law. Tort law governs civil wrongs committed against individuals or entities, seeking to provide compensation for harm or loss suffered due to the wrongful act of another party. On the other hand, contract law focuses on the enforcement of agreements between parties, emphasizing the fulfillment of promises made within legally binding relationships. While both areas share the aim of ensuring justice and fairness, they operate under different principles, requirements, and remedies. Understanding the fundamental disparities between tort and contract law is crucial for individuals and businesses alike, enabling them to navigate legal scenarios effectively and safeguard their rights and interests.

REFERENCES

Law of Torts -Dr.R.K Bangia | Allahabad Law Agency. (2024, May 26). Allahabad Law Agency | Law Book Publishers. https://allahabadlawagency.com/product/law-of-torts-with-consumer-protection-act-dr-r-k-bangia/

Rawat, S. (2023, April 1). Tort vs Contract: What Is the Difference? Social Laws Today. https://sociallawstoday.com/tort-vs-contract-what-is-the-difference/

Garg, R. (2023, March 30). Difference between tort and breach of contract – iPleaders. iPleaders. https://blog.ipleaders.in/difference-between-tort-and-breach-of-contract/#Introduction

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