UNDERSTANDING TORTS AND CONTRACTS

by Joelle Steele

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There are two terms that can be confused when any agreement, implicit (implied) or explicit (clearly stated), is breached: torts and contracts.

CONTRACTS

When you sign a contract, you and another person or entity are agreeing to do something together. The terms of your agreement are explicitly defined. If one of you doesn't fulfill his/her part of the agreement -- i.e., they breach the contract -- you may both end up in a lawsuit to enforce the stated contract terms and/or to reach a settlement. The law is there to back up the terms of your written agreement.

TORTS

Torts are very different. For example, what happens on those many occasions when there is no explicit contract and something goes wrong? You hire a plumber to repair your broken water heater. That's an implicit agreement between the two of you, and as a homeowner you have the expectation that the plumber knows what he is doing and that he will, in fact, fix your water heater and be careful and take every safety precaution when he does it. But, the next day when you come home from work you find that your basement family room is completely flooded and everything in it is ruined. That's a tort.

A tort is an injury or a wrong that someone inflicts upon another, whether it is accidental (e.g., negligence) or intentional (e.g., criminal). Sometimes it can be both. Torts is a branch of civil law that is often collectively referred to as "personal injury" law, but that is not the best definition for it since damages may be to property as well as to the body or reputation of a person. There are many different kinds of torts, including constitutional (your civil rights), automobile accidents (bodily harm, property damage), professional malpractice (physicians, brokers, etc.), property liability (slip and fall accidents, etc.), defamation (slander, libel), assault and battery (intentional criminal action), product liability (medicines, cars, etc.), and fraud (investment schemes, identity theft, etc.).

In general, a tort is the violation of one's legal duty, such as that which requires people to exercise caution and reason when there is any possibility that their actions might cause damage to someone or to another's property. But a tort can exist even if the person was careful and unintentionally caused damage. And a potential civil case could become a criminal case if the actions that caused the damage were of a criminal nature and the police were called in to arrest the person who caused that damage.

LEGAL REMEDIES

With contracts, the only things that one of the parties can sue for are those provisions or penalties laid out in the contract that come into play if the agreement is ever breached. A tort, on the other hand, usually entitles the injured person to a legal remedy that includes punitive damages (not awarded in some states) to punish the person for their actions; compensatory damages (money to pay for repairs, medical bills, lost wages, pain and suffering, etc.); and/or injunctive relief (e.g., a restraining order). The more negligent, malicious, or harmful the tort, the higher the monetary award.

A contract breach can usually be settled relatively quickly and often without undue expense. But the problems associated with the legal remedies for torts are usually related to the length of time (sometimes years) and amount of money it takes to settle them. There are also the related increases in insurance and legal fees that affect everyone. However, this kind of litigation is also what ultimately protects people in general by provoking public awareness that in turn leads to stricter laws.

SUMMARY

While there is always the potential for a tort of some kind, those who want to routinely protect themselves from the potential financial ruin that could occur from a specific kind of tort relative to their type of business, a well-written contract is definitely the answer. For the rest of the world, reduce your potential for a tort by being aware, careful, and cautious, and by obeying the law.