What Is the Difference Between a Business Tort and a Breach of Contract?

A breach of contract lawsuit and a business tort might arise from the same tangled situation, but they are legally distinct. A tort lawsuit involves a claim of injury. Almost anyone can commit a tort against another person or business, whether or not they knew each other beforehand. A breach of contract claim, however, turns on a broken agreement.

If your business has run into trouble with another business or an individual, you may want to know whether you can sue for damages and what kind of damages you could claim. This will depend on whether you have a claim for breach of contract, a tort claim, or both.

Business Torts in Florida

Like a personal injury tort, a business tort is a “civil wrong” against another party. Tort claims have four elements in common:

• One party had a duty to the other, whether that was a particular type of duty in the circumstances or a general duty of care.
• That party breached its duty.
• The other party suffered an injury due to that breach, and
• That injury resulted in damages.

To win a tort claim in court, a plaintiff has to show that the defendant injured them and caused them to suffer the damages they claim.

Florida, like many other states, has a “comparative negligence” policy for most tort damages. Where a plaintiff’s negligence contributed to their injury, a jury may determine their fault by percentage and reduce their damage award by that amount. If the plaintiff was more than 50% at fault, they cannot recover any damages. See Fla. Stat. § 768.81.

A plaintiff in tort may be able to claim noneconomic damages for mental distress, depending on the allegations. When a defendant has committed exceptional wrongdoing, the plaintiff can also receive punitive damages—an award intended to punish. See §§ 768.72–73.

Businesses commonly sue in tort for:

• Fraudulent misrepresentation. When one party deliberately deceives another and causes them to lose money, they have committed fraud. Businesses and individuals can sue in civil court to recover damages—an entirely separate proceeding from criminal charges.
• Breach of fiduciary duty. This is the highest type of duty that one party can owe another in business. Trustees have a fiduciary duty; partners can owe it to other partners, and directors can owe it to shareholders. Such persons owe, at the very least, a duty of loyalty and a duty of care, and more specific duties may apply. A breach of this duty can lead to major losses.
• Business defamation and trade libel. These are similar but distinct torts, both involving disparagement. Spreading false statements about a business or individual constitutes defamation; trade libel involves false statements about the quality of goods and services. (Yelp reviews have led to lawsuits on these counts.)
• Tortious interference with contract. One business may intentionally interrupt a contract or business relationship between two parties for its own reasons. For example, one company might deliberately “poach” a valuable employee from another, inducing that employee to break contracts and agreements.

Breach of Contract in Florida

When one party breaches a contract, it does not matter whether the breaching party was negligent or intended to cause loss. If the other party to the contract experienced a loss, they have the right to hold the other party to their promise or demand damages. What those damages may be depends on the circumstances, the terms of the contract, and the law.

Damages in a Contract Claim

A plaintiff in a breach of contract suit must first prove that the contract was valid—that there was a mutual agreement between the parties to undertake specific acts for consideration. In Florida, some contracts must be in writing, such as a contract for the sale of land, but many verbal contracts are valid and enforceable. The plaintiff must also show that there was a breach of the contract, which led to injury to the business.

In seeking compensation for their losses, the plaintiff asks the court to order remedies from the defendant; the defendant may counterclaim for different remedies. These can include:

• Direct damages and/or consequential damages. Direct damages compensate for the damages that result directly from the breach of contract, while consequential damages cover the business’s subsequent losses due to the defendant’s failure to perform.
• Incidental damages—shipping, inspection, and other expenses lost.
• Liquidated damages—monetary penalties provided by the terms of a contract.
• Specific performance. When a contract involves unique goods or services, the plaintiff may ask the court to compel the defendant to follow through with the contract.
• Rescission or reformation of the contract. One party may have grounds to request cancellation of the contract or reformation of its terms, especially if a mutual mistake was involved.

Unlike a tort lawsuit, a breach of contract suit does not permit a claim for noneconomic damages for mental distress. Although that mental distress may be very real, a contract claim is not an injury claim.

Your Orlando Guides to Business Law

When you have a business dispute, it’s crucial to act fast. Breach of contract claims and tort claims can have very different statutes of limitations, depending on the situation, and you may lose your rights.

Our business litigation team handles tort claims and breaches of contract every day, and we understand the pressures you’re under. You may want to work towards an amicable settlement, or you may need us to defend your rights in court. Let’s talk as soon as possible—call 407-449-8958 today.