C. Contract, Tort and Restitution

• Author: John D. McCamus
• Profession: Professor of Law. Osgoode Hall Law School, York University
• Pages: 13-18

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The subdivision of the law into various branches or divisions or subjects is a matter of increasing interest to common lawyers.²²It is also a matter of some contention. Indeed, it is not entirely clear how one would define the concept of a "branch" of the law²³nor is it clear how one would formulate the criteria for determining whether or not a particular experiment in designing or defining a branch of the law has enjoyed success.²⁴Nonetheless, the need to make such subdivisions is an inescapable part of any attempt to examine and understand legal doctrine. Moreover, notwithstanding attendant controversies, a professional consensus has emerged in the common law world in the nineteenth and twentieth centuries, to the effect that the private law of obligations can be usefully subdivided for such purposes into the law of contracts, the law of torts and the law of restitution or, as the last is sometimes called, the law of unjust enrichment.²⁵A useful first step

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in the examination of the law of contracts, then, is to locate contract within the private law of obligations and to compare its basic conception to those of tort and restitution.

The nature of the distinction to be drawn between "public" and "private" law is also a matter of contention. Public law is generally understood to refer to laws that define the relationship between individual citizens and the state whereas private law defines the relations between private individuals, one to another. Although the division between public law and private law is elusive, constitutional and administrative law, for example, are considered clear candidates for the category of public law, whereas contract and tort, on the other hand, are plainly within the category of private law. The private law of obligations, then, sets out the duties that private individuals owe to one another. In the common law system, those duties are typically, though not exclusively, the product of judge-made law.

At the risk of some oversimplification, the subject matter, basic animating principle and remedial objectives of these three branches of the law may be briefly described. The subject matter of the law of contracts is the enforcement of promises. The basic animating principle of the law of contracts is pacta sunt servanda, that is, as a matter of general principle, promises ought to be performed. The principal remedial objective of the law of contracts is to place the victim of a breach of contract in as good a position as he or she would have been in if the contract had been performed. As we shall see,²⁶this principle, often referred to as the expectancy principle, provides the normal basis for the calculation of damage awards in claims for breach of contract. Damages for breach of contract are thus "forward-looking" in the sense that they attempt to achieve for the victim of the breach, to the extent that an award of money can do so, the benefits of the promised performance. Thus, a seller who breaches a contract to deliver goods will be subject to a liability to pay damages in an amount that will enable the disappointed buyer to acquire equivalent substitute goods from another source.

The subject matter of the law of torts is compensation for injuries resulting from unprivileged or wrongful conduct. In its detail, the law of torts defines the nature of the unprivileged conduct that will attract tort liability and the kinds of losses that are compensable. The animating principle of the law of torts is that the wrongdoer must compensate the victim for losses resulting from the tortfeasor’s wrongful conduct. The remedial objective is compensation for the victim’s loss. Damages in a tort claim are thus "backward-looking" in the sense that they are

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calculated with the objective of restoring the victim to the position he or she was in before the tort occurred. In this respect, they are significantly different from the "forward-looking" measure of damages in contract. Apart from this important distinction between the remedial objectives of contract and tort, a fundamental distinction between the two bodies of doctrine is that the obligations arising under the law of contracts are, in theory at least, voluntarily assumed by the...