WHAT ARE THE IMPLICATIONS OF CONTRACT AND TORT LAW ON THE

BUSINESS?

What is a Contract?

A contract is an agreement between two or more parties that is enforceable in the courts. The

basic elements of any contract are agreement, consideration, competence, legality,

genuineness and form. To every contract, there are laws which govern the activities,

behaviours and actions of the contract participants and these laws can be otherwise called

contract laws.

The legal implications stemming from entering a contract depends on the contract itself.

Breach of Contract;

Each party to a contract has a duty to perform. If one party performs, and the other party

doesn't, the nonperforming party could face legal consequences. Failure to perform under the

contract amounts to a breach of the contract. The non-breaching party can file a lawsuit

against the other party to recover damages.

Level of Breach;

If someone entered a contract with you and breached the contract, you must determine the

type of breach that occurred. If it's a material breach, you don't have to perform your end of

the contract. A material breach happens when you don't receive the substantial benefit of your

bargain. For example, you enter a contract with a pharmaceutical company to import active

ingredients. The pharmaceutical company leaves a defect in the packaging material. This

example represents a minor breach. You received the substantial benefit of your bargain; the

active ingredient. Therefore, you must pay the pharmaceutical company. However, you can
sue the pharmaceutical company for damages to recover the money it would cost you to buy a

new packaging material.

Conditions;

Some contracts provide conditions for performance. They may provide that a party doesn't

have a duty to perform unless a certain condition occurs. Therefore, non-performance doesn't

always equal a breach of contract.

Statute of Frauds;

Certain types of contracts must satisfy the statute of frauds before a court will enforce them.

A contract satisfies the statute if the parties put the agreement in writing. The person

challenging the contract's validity must have signed it, and the document must state the

essential terms of the agreement. The following contracts must satisfy the statute of frauds:

contracts that can't be performed within one year, those creating an interest in land, an

agreement for an estate executor or administrator to pay a decedents debts, a contract for the

sale of goods for high amounts, and a surety ship contract. If you enter one of these contracts,

put it in writing and make sure the other party signs it.

What is a Tort?

A tort refers to a civil breach or wrongful injury against a person, group, or property. Just like

contracts, there are laws governing torts and this is called tort law. Businesses or individuals

can incur legal responsibility for violating tort law and must compensate with monetary

damages. In some cases, the perpetrator may also serve jail time. There are three categories of

tort: negligence, strict liability, and intentional tort.

 Negligence occurs when one party has a breach of duty and fails to exercise a

reasonable standard of care as required by law. As a consequence, the behaviour

causes injury to another party.

Strict liability describes the responsibility the individual who intends to commit the

act bears for injuring another party.

Intentional Tort
According to tort law, an intentional tort occurs when the action injures another

individual or property. Intentional torts cases must have four elements:

1) Duty
2) Breach of duty
3) Proximate causation
4) Damages
Duty refers to a partys responsibility to act or refrain from acting. Breach of duty

denotes a partys failure to do or not do what is required as dictated by the

circumstances. Causation provides the link between the actual failure to perform or

not perform the duty and damages sustained by the plaintiff. For example, if a

financial institution knowingly sells a speculative financial product it has a duty to

inform investors of the high degree of risk and loss of principal. If the company fails

to inform investors of the risk, and investors subsequently lose their investment

capital, the firm may be liable for fraud. Besides fraud, the most common types of

intentional torts include the following violations:

battery
assault
defamation
misrepresentation
trespass
conversion

False imprisonment, malicious prosecution, defamation by computer, and disparagement of

goods constitute of forms of intentional torts.

Tort requires those responsible (or "at fault") for harming others to compensate the victims,

usually in money. Typical harms can include loss of income (while the person recovers);
medical expenses; payment for pain, suffering, or even loss of a body part; or loss of future

income (assuming that said loss can be proven to be reasonably likely to occur. See

speculative damages). These components of the award can be adequately represented in

money terms, and (outside the United States) they most often constitute the largest element of

the award.

The classical purpose of tort is to provide full compensation for proved harm. This is known

under the Latin phrase restitutio in integrum (restoration to original state). In other words, the

idea underpinning the law of tort is that if someone harms someone else, they should make up

for it.

The primary criticism of the tort system is economic. Critics may decry the cost of

compensation payments themselves, or thatgranting that compensation is a worthy goal for

the injuredlitigation is an inefficient method of giving compensation.

Related to insurance in countries which do not have socialized medicine, the costs of the tort

system, and in particular medical malpractice suits, may raise the costs of health care. The

difficulty in this area is to distinguish between public and private health care providers. The

experience in the UK, where there is a fully public system run by the National Health

Service, is that tort claims have been restricted, for instance in disallowing loss of chance

cases. In the United States, it is easier for victims of medical malpractice to seek

compensation through the tort system. It is open to debate as to whether a change in the law

of tort either way would lead to significant reductions in cost or changes in practice.

Equality of treatment is also a central issue. If someone has an accident then they have a

statistical 8% chance of finding a tort-feasor responsible for their injury. If they are lucky

enough to have been injured by someone else's fault, then they can get full compensation (if

the tort-feaser is not judgment proof). For othersfor those injured by natural accidents, by
themselves, by disease or by environmental factors; no compensation is available, and the

most that can be gained for their losses will be meager state benefits for incapacity.

In general, tort law impacts businesses and consumers in various ways. Businesses are able to

respect consumers to a great extent. On the other hand, the consumers enjoy diversity in the

market.