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The Modern Intersection of Torts and Contracts

Contracts involve duties to known parties who agree to the contract. Torts involve duties to society at large, persons known and unknown. Professor Todd Zywicki explains that these areas have more overlap now in the global economy. Contracts through supply chains extend through multiple countries and people. For instance, if a product is defective, is that best addressed by Contract law or Tort law? https://youtube.com/watch?v=ToaWxXYhnKQ


One of the interesting questions that's really arisen in recent decades is the interface between contract and tort law. Now, why is that important? Duties under contract law are only assumed voluntarily. And you only owe duties to identifiable people who you understand that you're contracting with. If you don't enter in a contract with somebody you don't owe a duty to that person. Tort law creates duties to the world. People you've never met, not to be negligent. for example. And so one of the big challenges that we've seen in contract law over the past several decades is the rise of mass industrial society with standardized goods that travel through long supply chains, a television, for example, that might start in a components manufacturing shop in rural China and go to Korea to be assembled, and brought to the United States on a ship and brought in by a wholesaler, who then distributed it to a retailer, and you then take it into your house. If there's a defective product or defective part in that, it's not likely the retailer's fault. The retailer took a closed box. And so while that is a chain of contracts, it raises the question of what rights does the consumer have against somebody way back in that supply chain, who is the one who manufactured the defective parts in the first place. And so this idea that contract law is designed to basically deal with people's freely assumed and freely chosen duties and obligations starts to fit imperfectly with the complexities of the modern world. In many ways, it remains very simple with respect to transactions and may be more important than ever with a lot of things, such as intellectual property and the like, but at the same time, it starts to blend over into tort law when you start thinking about owing obligations to parties with whom you do not directly interact.

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