Traditional contract and tort claims exist mutually exclusively as distinct and separate actions. However, when one considers potential causes of action in the field of professional negligence there can be a significant area of overlap. The purpose of this discussion is to recognise some of the areas of overlap and to determine how this impacts prospective claimants, considering whether concurrent liability simply provides two methods of achieving the same thing or if it provides the claimant with a second bite of a slightly different cherry.

Concurrent Liability

To illustrate the similarities and differences between actions in contract and tort, I will be taking two potential claims for a case study: construction negligence (based upon a failure to take care when constructing a building) and solicitor negligence (based upon a failure to advise regarding the existence of third party rights on a piece of land). To begin, I will outline the basis of each claim in contract and in tort before considering the nuances between actions and concluding how such nuances impact a claimant.

In each case study a claimant has a contractual relationship with a professional (individual who holds themselves as having greater than average knowledge or skill). Following a construction error or the wrongful advice, there are two potential avenues for pursuing a breach of contract claim. The first is breach of an express term of the contract. This cause of action arises if the professional’s conduct breaches a specified term of the contract. For instance, in the construction contract, if it is specified that a building would have a certain feature and did not once constructed; or in the solicitor’s contract it was agreed that advice would be given on a particular aspect and it was not.

The second possible cause of action in contract is breach of a term implied by statute, namely section 13 of the Supply of Goods and Services Act 1982. Section 13 requires that the service provider (the professional) take ‘reasonable care and skill’ when carrying out their contracted duty. For instance if in the course of construction a builder caused damage to the surrounding building by reason for failing to take care, or if a solicitor failed to carry out sufficient due diligence regarding tax implications when writing a will. Although the claim in this circumstance will be pleaded under breach of contract the duty to take “reasonable care” is distinctly similar to the duty under negligence in tort.

In tort, a “reasonable care” duty can easily arise in each of the above case studies. Using theCaparo Industries plc v Dickman [1990] UKHL 2 three-stage duty of care test (proximity, foreseeability and fair, just and reasonableness) negligence can be argued. In the case studies there is a relationship of proximity (based on their contractual relationship), it is foreseeable that should either fail to take sufficient care and it is doubtful that any court would find it was unfair, unjust or unreasonable to impose a duty of care in such a case. If either fails to take sufficient care and this results in loss to the claimant there is also sufficient ground for the basis of a tort claim.

On a prima facie analysis it appears that the duties of professionals under section 13 of the 1982 Act and under the law of negligence are similar if not identical: both are based upon the concept of ‘reasonable care’. The significant overlap between the causes of actopm appears to erode away the traditional distinctions between tort and contract when “reasonable care” duties are concerned. However, a more in depth consideration of the current position of the law helps to reveal the court’s reluctance to allow and success in preventing a full overlap. I will focus on three areas of nuance: limitation, pure economic loss and remoteness. Each will be considered in turn before looking at how it impacts the outlook of prospective claimants.

Limitation

The first area of distinction is the application of limitation periods, although a textual analysis of the Limitation Act shows little difference in the rules, the practical application of limitation in tort and contract is distinct. Section 5 and section 2 of the Limitation Act 1980 state that the limitation period for an action in simple contract or tort, respectively, is “six years from the date on which the cause of action accrued”. The wording is identical; however, the accrual date in contract and tort can often be very different. In contract the accrual date is the date of breach: when the solicitor/surveyor failed to take reasonable care and gave wrongful advice. Whereas, in tort the date of accrual is the date of damage, or the date when the claimant suffered damage for relying on the information provided.

The practical implication of the difference in accrual date is varying limitation commencement dates for tort and contract which can have a significant impact on the expiry of limitation in a number of cases. For example, if advice is given 7 days before it is relied upon and therefore 7 days before harm is caused, there is a 7 day difference in expiry of limitation. From a claimant’s point of view the possibility of having extra time before limitation expires could be very useful in some cases. Where the contractual claim proves time-barred the tortuous one may well remain.

Pure Economic Loss

Another distinction between tort and contract claims is the availability of claiming for pure economic loss. Traditionally such a claim has been available in contract but not in tort. Nonetheless, in the context of cases of negligent misstatement such as Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 the courts have carved out an ambiguous category of cases of recoverable pure economic loss. In light of this we must consider the two scenarios I set out earlier. In the case of advice by a negligent solicitor, the law on negligent misstatement is likely to apply and subsequently a claim in pure economic loss is probably available. On the other hand, if we consider the position when suing a professional in the construction industry where the negligence has arisen from a defect in the construction it is unlikely that pure economic loss will be available. If a claimant’s house is damaged as a result of the defect this may be repaired (subject to the likeliness they will be repaired: Ruxley Electronics and Construction Ltd v Forsyth [1995] UKHL 8). However if the result is an undesirable finish that merely reduces the value of the property this is pure economic loss and will not be recoverable.

In effect, outside of negligent misstatement a claim in contract can be significantly wider and facilitates a broader claim of damages. Despite the fact that both the contractual claim and tortuous claim are based on the “reasonable care” taken by the defendant, the courts have continually shown reluctance to keep the availability of pure economic loss separate.

Remoteness

Finally, the respective tests for remoteness demonstrate further distinctions between claims in tort and in contract. Remoteness in contract is governed by the decision in Hadley v Baxendale (1854) 9 Ex 341 which held that heads of loss would only be allowed if they were “in the contemplation of the parties” at the time the contract was made. Conversely, the test for remoteness in tort is set out in The Wagon Mound (No 1) [1961] AC 388 which held that remoteness was satisfied if the loss is “reasonably foreseeable”.

On a textual analysis it is clear that the contractual test is, at least in part, subjective whereas the tortuous test is objective. As a consequence the contractual test for remoteness is significantly narrower than its tortuous counterpart. The impact for a potential claimant is that they may have more success in bringing a claim in tort than they would in contract if it is unclear whether the parties had considered a potential outcome.

An interesting consideration this is whether a claimant could win under a head of loss which was in the reasonable contemplation of the parties and win on a related but separate head of loss that was “reasonably foreseeable”. Reflecting upon the wording of a duty to take “reasonable care”, it would seem unlikely, but given the respective tests for remoteness it appears that the causes of action in contract and tort concurrent but distinct. Suppose a claimant pursues a claim against a solicitor, in the contract the parties specify that the solicitor should check if any pre-existing leaseholders have existing interest in the land. If the Claimant then purchases the land having relied upon the advice and it is discovered that there is both a leaseholder’s interest and another charge on the land. It can clearly be argued that the leaseholder’s interest was within the reasonable contemplation of the parties when the contract was made: it was specified. However, the same is not as clear in relation to the other charge, it is conceivable that, depending on the charge, a court may find it was not in the reasonable contemplation of the parties. Considering the contractual test for remoteness, a claim based on loss resulting from the specified interest may be allowed, but one on the unspecified interest may be too remote.

If we take the same scenario and consider remoteness if pleaded on a tortuous basis, the decision on remoteness may be different. In theory, the same court could decide that while not it in the reasonable contemplation of the parties, it was reasonably foreseeable that when investigating interests in a property of this type that the other charge may exist. Holistically, there is therefore a possibility that a court may refuse a breach of contract claim for the other charge, yet allow a claim in negligence. Given the similarities of the “reasonable care” duties under contract and tort, this nuance is extremely important and further illustrates the importance, for prospective claimants, of pleading both causes of action.

Claimant’s Perspective

As a claimant, there are a number of important considerations, including: which causes of action are available; which cause of action will provides the greatest chance of success; which cause of action will facilitate a claim for the desired damages? Each of these questions has been addressed above when considering concurrent liability and the following tips can be suggested for any potential claimant:

  1. If the claim is based upon a failure to take reasonable care, both breach of contract and negligence are available.
  2. A contract may expressly specify a responsibility which can give rise to a separate and actionable breach of contract.
  3. If limitation is in issue, a claim in negligence may provide a significant extension to time available.
  4. If claiming for pure economic loss, a claim can only be in breach of contract unless there has been a negligent misstatement.
  5. When claiming damages in contract, parties must have contemplated loss.
  6. When claiming damages in tort, only the type of loss needs to be foreseeable.
  7. There may be situations when a claimant can win on separate heads of loss using separate causes of action.

From the analysis, it can be concluded that reasonable care claims in both contract and tort have extremely similar scope. In the vast majority of areas the evidence required and arguments made will be identical regardless of the cause of action. However, there are a number of nuances between the causes of action that can have significant consequences for the success or failure of a claim. Therefore, it appears that where possible, cases should be pleaded to include breach of contract and in negligence.