This article is written by Pujari Dharani, a B.A.LL.B. student at Pendekanti Law College, affiliated with Osmania University, Hyderabad. The article talks about the differences between tort and breach of contract under various heads as well as the overlapping similarities. The article also discusses two important case laws which are related to the topic in question.
It has been published by Rachit Garg.
Initially, the tort and the breach of contract were under the same branch of law and no such distinction was made between them. However, later, English courts differentiated these two civil wrongs on various grounds. Gradually, due to many judgements and case laws, the distinction became more elaborate and clear. Now, the law of torts and the law of contracts have become two separate branches of law. Both contractual liability and tortious liability are not governed by the same principles, but rather by entirely different sets of legal principles respectively.
Understanding the concepts of ‘tort’ and ‘breach of contract’ separately as two different topics and distinguishing them is very essential for a law student. So, read this entire article and understand the differences between them.
Difference between tort and breach of contract
Meaning and definition
We know the law of torts is a separate branch of law. But, before knowing the concept and its definition, let us know the exact meaning of the word ‘tort’. The term ‘tort’ is French in origin and is derived from the Latin word ‘torture’ which means ‘to twist’. It conveys the meaning that those acts which are twisted i.e., not correct or straight are said to be a ‘tort’. With this, we can also make out that this word is synonymous with other English words such as ‘wrong’, ‘wrongful act’ and ‘civil wrong’. A person who commits a tort is called a ‘tortfeasor’ or ‘wrongdoer’. His wrongful act is termed a ‘tortious act’.
Coming to the definition part, a scientific definition of the word ‘tort’ has not yet been formulated. Also, no statute or law, in India as well as in foreign lands, defines this type of civil wrong. While a few legal scholars have tried to define it, they fail to lay down essential elements to constitute a civil wrong into a ‘tort’, as clearly laid in the case of ‘contract’. The reason for the non-existence of an exact definition is because of the composition of many torts, under the law of torts, which are largely different from one to another. Nevertheless, let us look into the most famous definitions of tort, given by popular legal scholars, which are as follows:
- 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.“
- Winfield stated that “tortious Liability arises from the breach of a duty primarily fixed by the law; this duty is towards persons generally and its breach is redressible by an action for unliquidated damages.“
- Fraser said, “it is an infringement of a right in rem of a private individual giving a right of compensation at the suit of the injured party.“
From the above definitions, we can draw out the following elements of tort:
- Tort is a civil wrong.
- In the commission of a tort, the duty imposed by law was breached by a wrongdoer. Here, the duty is to the general public as a whole, not a particular social group. Besides breach of duty, the wrongdoer is also said to have violated the right in rem of a private person.
- The said breach of duty is recoverable and the remedy for the same is common law action for unliquidated damages. Thus, the injured party has the right to compensation.
- Tort is neither a breach of contract nor a breach of trust nor any other similar obligations.
The above-stated elements are not exhaustive and specific. As already said, various torts have their own set of elements which may be absent in another tort. For instance, the intention is material to consider for constituting an act as the tort of deceit. Whereas the same is immaterial for the tort of defamation. But, the above elements indicate a few of the standard elements found in every given tort.
By reading the above definitions and subsequent elements, we can make out that a ‘negative approach’ is followed to find out whether a wrong is a tort. In other words, a wrong is considered a tort if it is not a breach of contract, breach of trust or any other defined civil wrong. For better understanding, let us illustrate that a person has committed a wrong. Firstly, we should evaluate its nature i.e., whether the wrong is civil or criminal in nature. Once we find out that the wrong is a civil wrong, then we should find out whether the said wrong will fall under the category of any civil wrong like a breach of contract or breach of trust or any other equitable obligation. If it does not include any other specified and defined civil wrong, then it automatically falls under the branch of the ‘law of torts’.
Breach of 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.” The whole Act ensures that there is no ambiguity regarding the interpretation of the provisions regarding all kinds of contracts and their consequences. Due to the clear and unambiguous provisions, there are established sets of essential elements which should be fulfilled to be called a ‘valid contract’. To learn the essentials of a valid contract in detail, click here.
Coming to the definition of ‘breach of contract’, it was also clearly described in the case of Associated Cinemas of America Inc v. World Amusement Co. (1937). It is defined as “a breach of contract occurs when a party thereto renounces his liability under it, or by his own act makes it impossible that he should perform his obligations under it or totally or partially fails to perform such obligations.” It says that there is a breach of contract on one party to the contract if either of the following possibilities occurs:
- A party fails to perform his duty in furtherance of the contract, or
- A party does an act which led to the impossibility of performance of the contract, or
- The party altogether refused to perform the contract.
If one party breaches the contract, the other party automatically be discharged from his contractual obligation to perform his part of the promise. To know more about the legal intricacies of the discharge of a contract, click here.
As mentioned earlier, a tort is a civil wrong. But, not all civil wrongs, such as breach of contract, breach of trust, etc., is a tort. Also, the stated definitions of tort clearly convey that the tort is not those civil wrongs which are termed as breach of contract and breach of trust or any other equitable obligations. Even U.K.’s Common Law Procedure Act, 1852 described tort as ‘a wrong independent of contract.’ The same definition was also adopted by the Limitation Act, 1963 by inserting the definition in Section 2(m).
As the contract and its breach are defined specifically and clearly, a tort is not defined exactly. Many legal scholars have given their version of definitions for tort. But, there is no one particular standard definition for tort due to its ever-growing nature. Likewise, there are no elements specified and fixed, fulfilling of which constitutes a tort as there in the case of a valid contract and its breach.
Origin of the concept
During primitive societies, there is no recognition between a tort and a crime. It is said that the law of torts originated from the Roman precept alterium non-laedere. This is a part of the juris precepta, the code of conduct governing members of a civilised community. This code of conduct was readily accepted by early English lawyers and prescribed remedies for violations of these duties. This led to the new body of laws which has grown as the modern law of tort. Thus, the English law of torts is a branch of English Common Law. The word ‘tort’ was first used in the case of Boulton v. Hardy (1597).
As previously mentioned, one tort is different from another tort, not just in the aspect of its ingredients but also regarding its origin. This is why there is no particular origin for the law of torts. However, it is said many torts have their origin in the writ of trespass and writ of trespass in the case. At first, a writ of trespass provided an effective remedy in the common law court to persons who were injured by serious injuries to their persons and property. The distinction between an action for trespass and an action of trespass in the case was that while the former lay for direct injury, the latter lay for indirect or consequential injury.
In the course of time, common law courts allowed actions of trespass on cases for new kinds of wrongs such as defamation, nuisance, deceit, malicious prosecution, conversion of goods etc., because remedies in respect of these injuries had become necessary in view of the changes that were taking place in society.
Thus, these writs, which grant reliefs to the aggrieved persons, are credited not only for the origin of this branch of law i.e., the law of torts but also for various other wrongs and legal principles that are considered to originate from these writs. Thus, multiple torts were created and born from these writs independently and evolved separately.
Here, it is pertinent to mention that the law of torts is a developing subject, it was grown for centuries and is still growing. Still, new kinds of torts are coming up due to various advancements in society and the ambit of this branch of law is growing day by day.
Breach of contract
Origin of the contractual relationship and its legal protections dates back to ancient times. Even in the English courts system, the royal courts took cases of this kind if ‘trespass on the case’ was alleged. As stated earlier, various other legal principles have originated from the writ of trespass and writ of trespass in the case, one among them is the law of contracts.
India is also no exception. The making of agreements was prevalent even during Vedic and mediaeval periods. The principles governing such contracts are drawn from the Hindu scriptures like Vedas, Smritis, Srutis, Dharmashastras, etc. Also, during Chandragupta’s reign, two persons or groups used to enter into a contract in the form of ‘bilateral transactions’. Thus, the law of contracts further evolved during Muslim rule and was significantly formulated and enacted during the British period. The statutory enactment is named the Indian Contract Act, 1872.
The difference between tort and contract was recognised only in modern times. Until the sixteenth century, the type of suit for a breach of contract was not prescribed but its object was accomplished by an action of trespass on the case. The growth of trade and commerce, which led to the increase of litigation in contracts, made a special form of action. Here, the distinction between tort and contract has emerged.
The origin of the law of torts is different from the origin of contract law. When we look into the whole history of both branches of law, we can find out many differences between the law of torts and the law of contracts. The former is not codified, while the latter resulted in a statute enacted by the legislation. Additionally, the law of torts is an ever-growing area of the subject and changes increasingly by including new torts every now and then, whereas Indian Contract Act, 1872 witnessed comparingly lesser amendments.
The concept of tort originated to recognise the wrongful acts done by a wrongdoer who infringed the legal rights of another person and caused damage to him. The first and main purpose of this branch of law is to acknowledge all those tortious acts where a wrongdoer, who has the legal duty imposed by law to not interfere with and violate the rights of other members of society, commits the said wrong. Through this concept of ‘tort’, the tortfeasor will be punished by the State, including paying compensation, for violating the legally protected interest i.e., rights of the injured party due to his or her commission of a tort is the second main purpose of this branch of law.
For example, if the wrongdoer breached the duty to not tarnish the reputation of another person in society, he is said to have committed the tort of defamation. Similarly, if a seller, who has a duty to disclose every detail of a good, remains silent at the time of purchase of the good by the buyer, will constitute the commission of the tort of fraud. For such commissions, tort imposes legal obligations on the wrongdoer to compensate for the loss or harm suffered by the injured party due to the wrong done by the former. With this, the second purpose of the tort will be fulfilled i.e., to transfer the loss from the injured party to the other party who is the reason for causing that particular suffering.
The purpose of the law of torts is not so much to punish the tortfeasors but to accommodate the losses in modern living and to afford compensation for injuries suffered by one party as a result of the act of another. In a nutshell, this branch of law is aimed at the accommodation of conflicting interests of two individuals or groups to accomplish a desirable social result.
Breach of contract
Contracting and making agreements, either expressed or implied, with each other in modern society have become a new normal. A mere purchase of a good can be termed a contract. A breach of contract can cause a lot of losses to an individual. Hence, a legal framework is necessary to fix the sufferings of parties who suffered losses so that the general public can freely enter into the contracts to fulfil their financial goals and necessities. Law of contracts lays down various legal principles which the parties to the contract must follow. Thus, the main purpose of the codification of the law of contracts is to legally bind the parties to the contract and make them liable if caused any breach by not performing their respective duties and promises.
In the case of tort, the duty to not negatively interfere with another’s rights, which was imposed by law, is breached and considered as a commission of a tort and punished subsequently. Whereas, in case of breach of contract, the contractual obligations created and imposed by parties themselves, not by law, towards each other is breached by either of the parties to the contract, to which compensation through a grant of damages would be available as a recourse to the injured party. Besides this, the purpose of both branches is similar.
Furthermore, Professor Winfield said, “At the present day, tort and contract are distinguished from one another in that the duties in the former are primarily fixed by the law, while in the latter they are fixed by persons themselves. Moreover, tort duty is towards persons generally, in contrast it is towards specific persons or a specific person.”
The broad and ever-growing law of torts has been classified in many ways. One such classification is of three types: tort requiring intention, torts requiring negligence and the wrongs of strict liability. Also, torts are classified into two kinds, namely, actionable per se and actionable on proof of actual damages. However, the most relevant classification of the law of torts is:
- Torts affecting the individual, including one’s reputation, such as assault, battery, false imprisonment, malicious prosecution, nervous shock, negligence and defamation (libel and slander);
- Torts affecting the immovable property such as trespass to land and nuisance;
- Torts affecting the movable property such as trespass to goods, detenue (wrongful detention), conversion and slander of goods;
- Torts affecting the family or domestic relations such as enticement or abduction, adultery, causing physical injury to a wife and seduction;
- Torts affecting business relations such as inducement of breach of contract, intimidation, injurious falsehood, deceit or fraud, passing off, negligent and innocent misrepresentation; and
- Certain miscellaneous torts like conspiracy, etc.
To study the above types of torts in detail, click here.
Breach of contract
The breach of contract is of two types because failure to perform or renunciation may take place when the time of performance has arrived or even before that. These are:
- Anticipatory breach and
- Actual breach
In actual breach of contract, non-performance of the contract occurs on the due date of performance, whereas it occurs before the due date of performance in anticipatory breach. For example, A contracted with B to supply 50 kilograms of rice to B on 1st April. Later, he failed to perform his promise on the due date i.e., 1st April. Here, he has committed an actual breach of contract. On the other hand, if A intimates B on 1st March itself regarding his inability to perform the contract on 1st April. Here, A committed anticipatory breach of contract.
To know more about the actual and anticipatory breach of contract in detail, click here.
Privity of contract
As already discussed, the commission of a tort is independent of the contract. And we also concluded that any civil wrong which is not a breach of contract or any other equitable obligation is said to be a tort. Hence, the parties to a suit, in case of an action for tort, are strangers to each other or at least there will be no contract between them. Therefore, a contract between the parties to the suit is not necessary for establishing a tort committed by the wrongdoer and seeking damages.
Till 1932, the rule of privity of contract, which was brought in by a judgement in Winterbottom v. Wright (1842), was necessary to prove even in case of an action for tort. Later, this fallacy was regarded as unreasonable and immaterial and stopped being used in 1932. In Donoghue v. Stevenson (1932), a customer suffered illness after consumption of ginger beer from an opaque bottle which contained decomposed remains of a snail. Here, the injured party filed a suit against the manufacturer even though there was no contract between them. There was a contract only between the manufacturer and the retailer but not with the consumers. The defendant pleaded the defence of privity of contract. However, the plea taken by the defendant was dismissed and judgement was made in favour of the plaintiff in spite of the absence of a contract. In this case, there are two scenarios, one is a breach of contract and the other is a lack of due care and negligence by the manufacturer. For both civil wrongs, two separate and independent cases can be filed. The former is available only for the party to the contract, while the latter is available for the injured person even if there is no contract between them.
For example, let’s take another example where a railway driver negligently drove due to which a passenger was injured. Here, the injured party can sue him for the injury he suffered either under the breach of contract as well as the railway employee’s tort of negligence. As this is the case where both the civil wrongs, i.e., breach of contract and tort of negligence, is committed by the wrongdoer, the injured passenger can go with either of the one. That means he or she can sue the tortfeasor even though there is no contract between them. Thus, the rule of privity of contract is not necessary for a civil action of tort.
Breach of contract
Breach of contract arises only when the parties to the suit have entered into a contract with each other and, subsequently, either of the parties failed to perform or fulfil the promise. To constitute a breach of contract in a civil court and claim damages for the same, submission of evidence which establishes the existence of a contract between the parties is necessary.
In addition, the doctrine of privity of contract mandates that only a person who is a party to the contract can enforce it. That is, it can not be enforced by any other person who is a stranger to the contract, although he or she is a beneficiary. As he or she is not a party to the contract, the individual can not seek rights under it.
When a case is filed for the commission of tort in a civil court, the parties to the suit will be strangers to each other. Sometimes, both of them know each other and can even be in a fiduciary relationship. But there will not be any contract between the aggrieved party and the tortfeasor. Whereas, in case of breach of contract, the story begins with the contract. That is, proving the contract is a prerequisite to constitute its breach and claim compensation, which is not the case for a tort.
In the case of a contract, the doctrine of privity of contract is strictly followed except in a few exceptional situations. Whereas, in the law of torts, this doctrine is not followed. It is not necessary that only the party to the contract can file a case against the wrongdoer. While in breach of contract, no stranger is allowed to sue a party to the contract for his or her failure to perform a promise or breach of contract.
The famous legal maxim, that is, ubi jus ibi remedium says that “where there is a right, there is a remedy.” In other words, if a legal right which is conferred by law is violated, then he or she will be entitled to claim compensation for the loss he or she suffered from the party due to whom the happenings are caused. Apart from this, legal damages or remedy is one of the essential components in constituting a tort.
However, not every wrongful act is actionable in a court of law. A few examples are cases involving acts of god, inevitable accidents, etc. In the law of torts, there is no hard and fast rule that only a wrongdoer is legally bound to compensate the injured party. Even the compensation, sometimes, may not be equitable to the loss suffered. It differs from case to case. It may be more or less. Hence, we can say there are many scenarios regarding the measurement of damages, a few among them are as follows:
- In case of vicarious liability, the compensation was paid by another person who has not even committed a wrong. As the person is in the position of master, he is legally liable for all the wrongs committed by his or her servants.
- In case of absolute liability, the convicted party is liable to pay a significant amount of damages through compensation.
- In case of strict liability, the general rule i.e., breach of duty to take care and precautions leads to liability, is not followed. Indeed, liability arises if the disputed event caused loss or injury to the plaintiff, despite no negligence on the defendant’s side. Here, whether the defendant took reasonable precautions is immaterial. The same also applies to cases of absolute liability.
- In the case of joint promisors or partnership firms, all partners are jointly as well as severally liable for the wrong done irrespective of the fact of who has committed and the intention of the individuals.
- In case of contributory negligence, where the plaintiff himself or herself contributed negligence which caused the event in question, the plaintiff is entitled to a reduced amount of compensation from the defendant. That is, the plaintiff is granted relief only to the extent to which the defendant is responsible for causing that injury.
Coming to the type of remedies granted in case of damage caused by any tort, there are broadly two kinds of remedies, i.e., judicial remedies and extra-judicial remedies. Judicial remedies are further classified into three remedies which are as follows:
- Specific restitution of property
In most cases, monetary relief, i.e., damages in terms of money, will be awarded to the injured party. But, sometimes, other kinds of relief are also provided. For example, in case of the tort of nuisance and subsequent serious consequences, a relief of injunction will be awarded by the court of law. In addition to this, if a person wrongfully loses possession of his property, he can either seek compensation or the recovery of the property itself. The former is damages, the latter is called ‘specific restitution of property’. The provisions for claiming specific restitution of damages are given under Sections 5, 6, 7 and 8 of the Specific Relief Act, 1963.
Furthermore, extra-judicial remedies are further classified into six remedies which are as follows:
- Self-help or self-defence
- Re-entry on land
- Recaption of chattels
- Distress damage feasant
- Abatement of nuisance
- Expulsion of trespass
To know more about the above-mentioned remedies, both judicial and extrajudicial remedies, click here.
Breach of contract
Remedies that can be used by the aggrieved party in the event of a breach of contract can be classified under three heads. The remedies are divided as:
- Under the law of contracts
- Under the Specific Relief Act, 1963
- Specific performance
- Under the Sale of Goods Act, 1930, some special remedies are-
- Right of withholding delivery
- Right of lien
- Right of stoppage in transit
- Right to resale
When we look at various scenarios of torts, we will get to know that remedies in the form of damages are being imposed not on the party at fault, but on another person who is in the position of master to the person who committed the tort. Whereas, in case of breach of contract, damages are only imposed on the party who failed to perform the obligation, but on any other third party.
As already discussed before, the award of legal damages is the most common judicial remedy in the law of torts. Basically, the damage is an amount of money paid by the defendant to the plaintiff due to the decree of the court. This is very often used by the courts because it is impossible to undo the unlawful act committed by the wrongdoer. Hence, the courts generally evaluate and decide the sum of money, which is equivalent to the harm caused, that should be paid by the defendant to the plaintiff to which he or she may redress the loss suffered and attain satisfaction. Besides this, if a court granted damages, it is clear that the wrong is a civil wrong, not a criminal one.
Here, it is pertinent to note that the damages are unliquidated. That is, the amount of compensation is not predetermined by the parties to the suit, rather, it is at the discretion of the court to assess the amount of harm or loss suffered by the plaintiff and grant the damages accordingly. Provided that the court calculates the exact amount which was equivalent to the injury or harm suffered by the aggrieved party. Court ensures that the damages fixed are either more or less.
Breach of contract
A contract is based on a promise which is supported by some consideration. If the breach of contract happened, the remedy available is either specific performance or a grant of damages. The party, who was affected by such breach of contract, can bring an action claiming damages for loss suffered. The burden of proving the loss lies on the plaintiff or injured party.
Here, the damages granted are liquidated, and not unliquidated as in the case of tort. Generally, liquidated damages are those damages which are determined and agreed upon beforehand by the parties to the contract themselves. In simpler words, the parties to the contract, while drafting a contract should also be conscious of including those terms which prescribe the amount of compensation an injured party should receive from the party at fault in case the breach of contract occurs by the latter.
Not just a genuine pre-estimate of the probable damage that is likely to result from the breach is considered as ‘liquidated damages’, but also includes those sums less than the amount of probable damage.
However, courts are at their discretion to even reduce the stipulated amount which was fixed by the parties to the contract. It was done to remove any arbitrariness while granting damages.
As stated before, in the case of torts, unliquidated damages are granted. Whereas, in case of breach of contract, it is liquidated damages. This is one of the major differences between a tort and a breach of contract. As the amount of damages is stipulated in case of breach of contract, the same is not the case with tort. Because, in most of the torts, parties to the suit are not known to each other and, hence, there is no agreement between them as to the measurement of the damages. So, the role of determining the amount of compensation to be awarded to the plaintiff is held by the courts. Thus, the damages are unliquidated.
In torts, either general or exemplary damages or both can be awarded based on the facts and circumstances of the case. Whereas, in the event of a breach of contract, a grant of general damages is a rule and the award of exemplary or punitive damages is an exception. Those exceptions are in cases of breach of promise to marry and wrongful dishonour of cheque because of their criminal nature.
After the detailed reading of the above text, we understand clearly that there is a lot of difference between the legal concepts of tort and breach of contract. Now, let’s summarily discuss the above comparison between the two with the help of examples.
Let’s say a buyer promised to buy a seller’s property on one particular date. Subsequently, the buyer failed to perform his promise, i.e., he did not purchase that property on the said date. This is clear that the buyer breached the promise. Thus, he is liable for breach of contract and, due to which, his wrongful act is not considered a tort.
Let us take another case where a neighbour, due to marriage, has hired DJ services which are being played even during night hours. Because of the nuisance created by the loudspeakers, people living in houses nearby are not able to sleep properly. Here, to evaluate whether the stated wrong is a tort or not, firstly, we should know whether it is civil or criminal. The facts of the present case show it is a civil wrong. Secondly, there is no contract or trust between people who hired DJ services and neighbours living nearby. Thus, there is no breach of contract or breach of trust. As the said wrong is a civil wrong and does not fall exclusively under breach of contract or breach of trust or any other category of civil wrong, it is a tort of nuisance. Thus, a tort is a civil wrong which does not belong to other types of civil wrongs.
Let us illustrate another situation where both tort and breach of contract exist. A hired a truck from B, a truck owner. Thus, there is a contract between A and B where the former agrees to return the object safely after usage of it. Later, A gave the truck to his friend, C, for some particular purpose. Because of the negligence of C, the engine of the truck got damaged. Here, there is no contractual relationship between B and C. In the present case, both A and C are liable for their respective wrongs. A was liable for breach of contract because of the failure to perform the contract. And, C was liable for the tort of negligence as he breached the duty, i.e., C omitted to take care.
Summarising the difference between a tort and a breach of contract
|Basis of differentiation||Law of torts||Breach of contract|
|Codification of 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.|
|Duty fixed by||Law||Parties themselves|
|Duty is towards||Every member of the society at large.||Particular person or persons.|
|Consent||A tort is committed without or against the consent of the injured party.||Parties enter into the contract willfully and with free consent, which is one of the essential elements of a valid contract. Its breach is against the will and interests of the parties.|
|Violation of right||A tort is a violation of a right in rem i.e., a right vested in some particular individual and available against the public at large.||A breach of contract is a violation of a right in personam i.e., a right available against some particular person or party.|
|Right of third party||A third party is allowed to sue the wrongdoer for the tort committed by him, although there was no contract between the person causing injury and person injured.||A third party is not allowed to sue the parties to a contract for the breach of contract, according to the principle of privity of contract. But, there are a few exceptional circumstances to this.|
|Privity of contract||To prove a tort, there is no need to establish privity of contract.||To prove a breach of contract, the privity of contract between parties to the suit must be proved by the plaintiff.|
|Motive||In tort, the motive is often considered.||To constitute a breach of contract, the motive is not necessary to prove, as it is immaterial.|
|The measure of damages||In tort, the measure of damages differs from each to each. Sometimes, it may be nominal damages. In other grave cases, it may be exemplary.||In cases involving breach of contract, damages are always compensatory, not penal. However, in exceptional cases like a breach of promise to marry and wrongful dishonour of cheque, punitive damages are awarded.|
|Type of damages||In the case of tort, the claim in the suit is for unliquidated damages, requesting the court to decide the amount at its discretion.||In case of breach of contract, the suit is filed to seek liquidated damages which are already determined by the parties to the contract while entering into the contract.|
|Exemplary damages||It can be awarded based on the facts and circumstances of the case.||The general rule in the law of contracts is to grant monetary compensation, either general, special or nominal damages, to the injured party. However, exemplary damages can also be granted in exceptional cases like a breach of promise to marry and wrongful dishonour of cheques.|
|Actual damages||In tort, compensation granted may or may not be actual damages i.e., a person injured is entitled to receive damages even if he has not suffered any actual loss.||In breach of contract, the injured party is entitled only to actual damages. That is, the compensation he or she receives equals the loss he or she suffered.|
|Special circumstances||Due to the special circumstances, injury or loss is caused, and the wrongdoer is liable for the special damages even if he or she does not have knowledge about the impact of those special circumstances.||The party who breached the contract will be held liable only if he or she has knowledge or received intimation from the plaintiff that special circumstances would cause more damage to his or her interest.|
|No compensation||There is no case where compensation is not awarded despite the commission of tort unless another remedy is granted. Where there is a loss, there will be payment of damages by the defendant to the plaintiff.||Restitution of benefits through compensation can not be done in case of void agreements and void contracts, as per Section 65 of the Indian Contract Act, 1872.|
Similarities between tort and breach of contract
Even if a tort is different from a breach of contract in many ways, we can still find a few similarities between them. Those are as under:
Both are civil wrongs
Both tort as well as breach of contract are civil wrongs. Thus, in both cases, civil proceedings will be initiated by the plaintiff against the defendant for the loss suffered by them respectively. Subsequently, in both scenarios, the essential remedy is the grant of damages, i.e., monetary compensation. In case of tort, the wrongdoer will pay compensation to the injured party for harm or loss caused by the former. Similarly, once the breach of contract is proved in the civil court and specific performance is not possible, the party who breached the contract and failed to perform his or her promise or set of promises will be held liable to pay the stipulated compensation to the injured party for the loss caused due to the breach of contract.
Both are different from crime but has similar intersection
Both tort and breach of contract are different when compared with crime in various aspects ranging from its definition to its type of verdict, including remedy. That is, for civil wrongs like nuisance, trespass, etc., the remedy can be mostly in the form of monetary compensation. In other cases where circumstances are more serious, then reliefs like injunction can be granted.
However, there is another side to the coin too. That is, some wrongs such as defamation, conspiracy, and adultery, among other wrongful acts, can be both torts as well as crimes. Likewise, a breach of contract can also be a crime due to the grave nature of the injury caused and other statutory provisions. For this, examples are ‘breach of promise to marry’ and ‘wrongful dishonour of cheque’. Both are said to be breaches of contract due to non-performance of promise by the promisor as well as crimes under the Code of Criminal Procedure, 1973 (CrPC) and the Negotiable Instruments Act, 1881 respectively.
Whether it is a tort or breach of contract, if the criminal element is involved, then the aggrieved party is entitled to both civil remedies to receive compensation and criminal remedies to punish the wrongdoer for the crime he or she has done.
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.
A, owner of a cow, 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
Addis v. Gramophone (1909)
The case of Addis v. Gramophone (1909) is a very famous case law where a distinction is made between the breach of contract and tort. In this case, it was also observed those situations where exemplary damages could be granted.
Facts of the case
The defendant company, Gramophone, employed the plaintiff to manage his business at some stipulated remuneration along with commission on trade done. According to his employment contract, he could be dismissed with six months’ notice. After a considerable time, the plaintiff received six months’ notice from the defendant and, at the same time, another person was appointed to replace him. Because of this, the plaintiff was prevented from functioning as manager even during that six months notice period by the defendant company, thus, making him deprived of his commission. The plaintiff sued the defendant for exemplary damages due to the breach of contract, wrongful dismissal and mental pain suffered.
Issues of the case
- Whether the defendant is liable for breach of contract or for tort?
- Whether the plaintiff entitled to receive damages?
In the present case, it was observed by the court regarding the distinction between tort and contract that a contract is a species of agreement whereby a legal duty is established and stipulated between the parties to it. It is a legal and contractual relationship in which the nature, content and consequences are determined beforehand and formulated by the agreement of the parties. The court observed:
“…… by entering into a contract, the parties to it create for themselves rights and obligations and a breach of duty arising out of those obligations is actionable as a breach of contract, and when it is necessary to establish the existence and enforceability of the duty, prove and rely upon the contract, the only action that can be brought is an action for breach of contract and the breach of a duty of this kind is not a tort. Thus an action for wrongful dismissal of an employee is a breach of contract and not a tort.“
The House of Lords held that the defendant is liable for the breach of contract and must pay damages to the plaintiff for the loss suffered by him. It was also noted that the defendant infringed the right of the manager by not allowing him to do his job and subsequently earn a commission. Here, the defendant not only breached his contractual obligation but also prevented the plaintiff from exercising his right. Therefore, the plaintiff is not only entitled to receive such compensation, which is equivalent to his salary, but also a commission that he likely would have earned during the six months. Except these, the plaintiff is not entitled to receive other damages, i.e., for mental pain and loss of reputation.
Lumley v. Gye (1853)
Lumley v. Gye (1853) is an important case law in which ‘inducement of breach of contract’ is recognized as a tort. It is a most interesting case where a conspicuous example of malice is an essential element for constituting a tort.
Facts of the case
Johanna Wagner, a famous opera singer, had entered into a contract with Lumley, the plaintiff, to perform at his theatre for three months. There is a condition to this particular contract, i.e., Wagner should not give a performance or use her talent elsewhere during the said term unless the plaintiff agreed to it in writing. The plaintiff used to pay the highest remuneration in his theatre for her performance. The people were attracted to the songs sung by Miss Wagner. Many people went to the plaintiff’s theatre, which benefited him in terms of profits.
Gye, the defendant, was the owner of another theatre. There was business rivalry and competition between Lumley and Gye. To attract the public, the defendant approached Miss Wagner to make a deal with her. Here, the defendant has full knowledge that there is a contract in force between Wagner and Lumley. With the malicious intention of injuring the plaintiff, Gye persuaded her to cancel the contract with Lumley. Also, he requested to enter a new contract with him to sing only in his theatre, for which he offered to give much higher remuneration than that the plaintiff had given.
Later, Miss Wagner ended her contract with the plaintiff, entered into a contract with the defendant on much higher remuneration, and began to sing in the defendant’s operation theatre. This caused too much loss to the plaintiff. The plaintiff sued the defendant for causing him loss by inducing her to breach the contract.
Issues of the case
- Whether the plaintiff suffered losses directly due to the defendant’s wrongful act?
- Whether the plaintiff had a cause of action against a stranger to the contract for his wrongful act and sought damages?
- Whether the defendant, Gye, be liable for the loss or damage suffered by the plaintiff, Lumley?
- Whether there is any special damage, i.e., damage beyond breach of contract in the present case?
- Is it necessary to prove the intention of the defendant to induce the breach of contract by the plaintiff?
In the present case, the court observed that there are two instances, i.e., both tort and breach of contract. The former was committed by the defendant, Gye, and later was committed by Wagner. Here, the plaintiff need not choose or elect either of the wrongs to avail remedy because these two causes of action are distinct and consistent. That is, if the plaintiff availed one remedy, there is no restriction to avail remedy of other wrongs. But the only restriction here is that the plaintiff should not receive double compensation and the actual damages received by the plaintiff by one cause of action should be presented before the court in evidence during proceedings for the second cause of action so that the plaintiff will receive a reduced amount of damages.
The court also observed that the cause of action for a tort committed by the defendant, who is not the party that breached the contract but induced one of the parties to the contract to breach it, is maintainable.
Learned judge Wightman, J. observed, “It was undoubtedly prima facie an unlawful act on the part of Miss Wagner to break her contract, and therefore, a tortious act of the defendant maliciously to procure her to do so, and if damage to the plaintiff followed in consequence of that tortious act of the defendant, it would seem …. upon a general principle, that an action on the case is maintainable.”
Furthermore, Lord Justice Brett gave his opinion that “Merely to persuade a person to break his contract may not be wrongful in law or fact. But if the persuasion is used for the indirect purpose of injuring the plaintiff, or of benefiting the defendant at the expense of the plaintiff, it is a malicious act, which is in law and in fact a wrong act, and therefore an actionable act, if injury ensues from it.”
Here, the word ‘malicious’ means having a bad motive and intention to injure another person, which is unjustifiable in the eyes of law. The word is not used in its ordinary sense, and any persuasion of the breach because of which the defendant is satisfied with his ill feelings is not “malicious”, according to the court in the present case.
The defendant, Gye, was held liable for interfering with the contract between Miss Wagner and the plaintiff, which is further termed as “tort of inducing breach of contract”. Thus, the court ordered the defendant to pay damages to the plaintiff for the loss suffered by her.
Regarding the burden of proof on the plaintiff to prevent the intention of the defendant to induce the singer for breach of contract, the court held it is not necessary to establish the said tort. A mere breach of promise by the contracting party and subsequent injury or damage to the opposite party is sufficient for an action of tort.
The court also announced that any stranger to the contract has a duty to refrain from doing such an act which maliciously procures a breach of contract. Here, the duty declared which is based on sound policy is imposed by law and, thus, should be followed by the general public. However, the judges made the principle exclusively limited to personal service.
With this, we can conclude that tort is different from breach of contract in many ways. Even the courts in past as well as the present distinguished those two from each other and adopted separate methods while dealing with them. As both are of different branches, one should not be confused while distinguishing them, especially when both instances are found in one case.
Frequently Asked Questions (FAQs)
Are torts found in contracts?
Many legal authors, whether Indian or foreign, defined tort as an independent civil wrong which is not those wrongs that arise from a breach of contract or breach of trust or any other equitable obligation. Nevertheless, there are a few torts which are not apparently independent of the contract. These torts are also ‘torts founded on contract’.
A few examples of such rare torts are:
- Inducing breach of contract
- Malicious Falsehood
- Passing off
Is inducing breach of contract a tort?
It became the well-established rule that a third party should not interfere with a contract that was made by two others. Inducing a third party to breach the contract with the intention to create losses or damage to the other contracting party without lawful justification or excuse is a tort. Also, in Quinn v. Leathem (1901), Lord McNaughten said that “a violation of legal right committed knowingly is a cause of action and it is a violation of legal right to interfere with contractual relations recognized by law if there be no sufficient justification for the interference.”
For instance, let us say that A, a buyer, contracted with B, owner of the property, to purchase the land for Rs. 10 lakhs. C, a stranger to the contract, persuades A to not purchase the property by falsely disclosing that the property is government property. A, without checking the facts, believed C and failed to perform his purchase to buy the land. Here, C induced A to breach the contract by preventing him from performing the promise without lawful justification and, thus, committed a tort.
As per the rule of Lumley v. Gye, there are the following three elements to constitute the tort of inducement of breach of contract:
- There must be interference in the execution of the contract,
- The interference must be deliberate, and
- The interference must be direct.
- “Law of Torts” by Dr. S.R. Myneni.
- “The Law of Torts” by Dr. R.K. Bangia.
- “Avtar Singh’s Law of Contract & Specific relief” by Rajesh Kapoor.
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