TORTS AS RELATIONAL CONTRACTS
293
IV. Contracts & Torts: The True Distinction
I suggest that the real distinction between contracts and torts is hinted at
by the label we give the respective causes of action. In contract law the
relevant form of action is called breach of contract, which suggests that,
prior to the breach, there must have been a contract already in existence
that was capable of being breached. In torts, however, one simply claims
to be a victim of a tort. While tort law does have a doctrine of breach, both
that breach and the existence of the duty which has allegedly been violated
essentially come into existence simultaneously. In other words contract law
deals with two phases: formation and performance, while tort law has solely
the performance phase.
The contractual “formation phase” is not only analytically distinct from the
“performance phase” but also, as a matter of practice, normally precedes
it in time. The law of torts, by contrast, has no discrete “formation phase”
at all. Instead, whether or not a duty exists can be determined analytically
only as part of the performance phase, and this determination can, in prac-
tice, often be made only after the event
.
61
This becomes especially clear
when dealing with cases of economic loss in torts, when it is possible to
establish whether any duty of care was owed to the victim only once we
know whether the loss suffered was purely financial or resulted from some
form of prior physical harm
.
62
In other words, one party needs to suffer an
injury in order to tell us whether the relative status of the parties suffices to
create a legally meaningful relationship
.
63
61 See, e.g.,
Palsgraf v. Long Island Railroad
,
.
62 See, e.g.,
Louisiana ex rel. Guste v. M/V Testbank,
.
63 See, e.g.,
Raas v. State
,
,
where it was held that
the state owed a duty to an individual who was attacked in the parking lot by inmates
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