Casualty & LiabilityQuestion 92 of 215
Which of the following BEST describes the difference between tort liability and contract liability?
a.Tort liability is created only by statute; contract liability is created only at common law
b.Tort damages are always capped at $250,000; contract damages are unlimited
c.Tort liability requires a written agreement; contract liability does not
d.Tort liability arises from a breach of a duty imposed by law (independent of any agreement), while contract liability arises from a breach of a duty voluntarily assumed by the parties' agreement
Explanation
A TORT is a civil wrong arising from the breach of a duty IMPOSED BY LAW for the protection of others (e.g., the duty of reasonable care). A CONTRACT obligation arises from a duty the parties have VOLUNTARILY UNDERTAKEN by their agreement. The same facts can sometimes give rise to both (a doctor's malpractice can be both a tort and breach of contract), but the distinction in source of duty is fundamental.
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