What is Tort (Unlawful Act)?

Tort liability arises independently of contract. Where contract law governs obligations between parties who have agreed terms, tort law provides a remedy when harm is caused by one party to another without — or in addition to — a contractual relationship.

For a successful tort claim, five elements must typically be established: an unlawful act (a breach of a legal duty, infringement of rights, or conduct falling below the applicable standard of care), attributability to the defendant, damage suffered by the claimant, a causal link between the act and the damage, and the damage falling within the scope of the rule violated.

There are three recognised forms of tortious conduct. The first is infringement of a subjective right — for example, intellectual property rights, property rights, or personality rights. The second is conduct in breach of a statutory duty. The third, and broadest, is conduct that falls below the standard of care expected in ordinary commercial dealings, even where no specific rule has been broken.

In the context of commercial contracts, tort is relevant as a supplementary or alternative ground for liability alongside breach of contract. If there is no direct contract between two parties but one causes loss to the other — for example, a sub-supplier to an end client — tort provides the liability hook. Fraud, misrepresentation at the time of contracting, and deliberate anti-competitive conduct can also give rise to tort claims in parallel with contract claims.

The limitation period for tort claims is typically five years from the date the claimant became aware of the loss and the identity of the person responsible, subject to a long-stop of twenty years from the date of the act.

Tort provides a path to compensation even where no contract exists, where the contract is not between the right parties, or where contractual liability caps have been negotiated down to an inadequate level. In serious commercial disputes, running a tort claim alongside a contract claim can significantly improve your prospects of full recovery.

For SMBs, being aware of tort is also a risk consideration: careless or misleading conduct in commercial dealings can expose your business to claims that go beyond the scope of any contract.