Article by Thomas C. Galligan Jr.
Almost playfully, life constantly defies the arbitrary categories we impose upon it. Legal categories provide no exception to this general observation. The common law divides substantive private law into three broad headings: contracts, torts, and property. So does the civil law: obligations (contracts), delicts (torts), and property. Law schools teach these subjects as separate courses. Likewise, most legal treatises preserve this segregation. However, real legal problems, because they are real problems, arise on the edges of these jurisprudential categories. Real law attempts to solve these borderline problems despite its self-imposed categories. It is my purpose to examine some of the issues that arise when two of the categories, contracts and torts, intersect. I aim to see what happens at the boundary of these two legal categories.
There is a fundamental difference between the values underlying contract and tort law. Contract law is based, in large part, on the notion that people should be free to do as they choose. In this vein, contract doctrine is consistent with the micro-economic model that serves as the basis for our capitalist society. People who are free to do as they choose consequently are free to maximize their personal utilities. One of the primary ways that people strive to maximize personal utility is through private exchange. By making exchange decisions consistent with one's self-interest, individuals, in turn, will do what is best not only for themselves, but also for society.
The purpose of contract law, in an individualistic society, might be three-fold. First, it might facilitate free exchange, thereby maximizing people's freedom to do as they choose. Thus, contract law might protect the notion of freedom of contract. Second, contract law in such a society must provide the broad boundaries within which people are free to transact. Some deals, even in an individualistic society, are simply intolerable. Binding oneself to slavery is a contract that immediately comes to mind; however, other less blatantly unacceptable deals may also be proscribed. Third, contract law would provide rules that determine when people are, in fact, bound.
Tort law, on the other hand, has a different philosophical bent. Tort law is more communitarian in nature and purpose. While contract law generally turns on the idea that people can do as they choose, as long as they do not step outside its very broad contours, tort law imposes more drastic limits on individual freedom. It does so by requiring one individual to make compensation to another if he or she acts in a way that the community determines to be tortious. Certainly, committing an intentional tort exposes one to liability. More intrusively, the failure to act as a reasonable person under the circumstances can, in many cases, result in liability for negligence. One may view the reasonable person standard as the symbolic point at which society arrests unfettered freedom of action.
One may be strictly liable in tort for exposing another to an unreasonable risk of harm in the manufacture of a product or, in a civil law jurisdiction like Louisiana, merely by maintaining an unreasonably dangerous thing, or owning an unreasonably dangerous building or animal. In Louisiana, one may even be strictly liable for begetting and then residing with his or her unreasonably dangerous minor children. Interestingly, in determining whether or not a product, thing, building, animal, or child presents an unreasonable risk of harm, Louisiana courts have employed the same type of balancing used to determine negligence under the reasonable person test. Thus, even in the imposition of strict liability, one sees the use of a reasonability-based community standard. Moreover, an employer may be vicariously liable if its employee commits a tort in the course and scope of his employment. Thus, a mere relationship can expose one to tort liability. Finally, one may be absolutely liable in tort for engaging in an ultra-hazardous or abnormally dangerous activity. In sum, tort law, by relying upon community standards, imposes more onerous burdens on individual freedom of action than does contract law.
Although opposing philosophies underlie torts and contracts, the two bodies of law exist side-by-side the world over. Ironically, Dean Prosser pointed out in 1954 that the historical relations between common law contract and tort were not antagonistic and that contract law actually grew from the same writs that lawyers used for what we now think of as tort claims. But, how can two philosophically diverse areas of law coexist today? And what happens when they meet? What happens at their boundary?
One might argue that tort law ought to be applicable only when there is no possibility of contract. Only when individuals cannot be expected to bargain over an issue should tort law step in. And then, perhaps, tort law should try to mirror what the parties would have done if they could have negotiated over the issue. This would be a contract view of the world. Or, one might argue that tort law should control whenever society, and not the parties themselves, decided that it should set appropriate rules or standards. This would be a tort view of the world. Theoretically, one may search cases at the intersection to determine whether individualistic or communitarian values predominate in a society.
But what actually happens at the boundary? The question, in the abstract, is not whether contract or tort law is more important, but rather, how do the two bodies of law interrelate? More particularly, when looking at discrete cases and limited bodies of the law, what transactional model for decision making in borderline lawsuits prevails: contract or tort? And how does the existence of a contract effect potential tort claims?
It is to these limited inquiries that I will direct my attention. As such, I have devised transactional models of several areas in which tort and contract law intersect in order to examine how courts have characterized suits in these areas. To do so, I deal with a number of hypothetical relationships involving three mythological actors, the once-famous Chicago Cubs double-play combination of Tinker, Evers, and Chance.
First, and foremost, one may wonder why it all matters. Apart from the philosophical nature of the dispute, one may simply say: “So what?” In the next section, I will answer this question by discussing the consequences of characterizing an action as contract or tort. While I focus on Louisiana law, I by no means limit myself and include discussions of other jurisdictions as well. Thereafter, I will turn to the Tinker, Evers, and Chance hypotheticals and the transactional models that they represent. Finally, I will note some simple conclusions.
About the Author
Thomas C. Galligan Jr. Professor of Law, Louisiana State University Law Center. A.B., Stanford University 1977; J.D., University of Puget Sound (Seattle University) School of Law 1981; LL.M., Columbia University 1986.
Citation
69 Tul. L. Rev. 457 (1994)