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Tort or Contract?

How to tell the difference in small claims court.

Human activities, like the people who are involved in them, don't always fit into neat categories. Likewise, there are some legal actions that mix elements of contracts and torts so thoroughly that you can't separate them. Torts are related in many ways to contracts. With contracts, a duty spelled out in an agreement may be violated, which results in injury. In the case of torts, the duty comes from general laws or customs. Cases involving a combination of contract and tort are different from pure torts only in the origin of the duty involved.

For example, in "The Case of the Provable Feast," Bailey went into his local hamburger outlet, Fare and Fast, and ordered their Big Bully Burger. He was into his third large bite when he bit into something hard and felt his teeth grind in a most uncomfortable way.

After he screamed, he looked to see what appeared to be a sprocket-a little steel wheel with teeth on the outside-sticking out of what was left of his Big Bully.

Bailey had to have expensive dental work done, and when Farr, the owner of Fare and Fast, refused to pay, Bailey sued in small claims court.

The case started with a contract: Bailey's promise to pay in exchange for Farr's promise to supply a burger to him. But there was also a general duty on the part of Farr to supply the food without anything being in it that was dangerous to her customer. This principle applies to any kind of goods sold new, not only food. So Bailey, who for a while was known as "Toothless Tony," could recover for the injury that resulted directly from Farr's failure to live up to her duty.

Conversion From Contract to Tort

Small claims tort cases often begin with contracts. You lent your mini-chainsaw to your brother-in-law, Framus, so he could cut down some small alder trees. You didn't learn until too late that Framus, always looking for an angle, rented it to Frieda, his neighbor down the street, so she could cut down an old red oak tree.

If you got back what was left of your saw, you could sue Framus for damage to the saw because he converted it-used it inconsistently with your agreement. You could also recover the rent he got from Frieda, because Framus got it wrongfully.

The rule is, if you lend someone your property, and they use it in a way you did not foresee or give permission for, you may recover for this tort of conversion.

Conversion can be committed either intentionally or negligently.

In another example, you take your car in for a $60 repair, and when you get it back, your $75 tennis racket and $100 speakers are missing from the back. The repair shop committed "acts inconsistent with the limitations of their permitted possession and use of your property." This is a contract of bailment, where one person gives property to another, trusting that the one getting the property will take care of it while he or she is fixing it or improving it in some way. The conversion results from violating this trust.

Or you take your car in to the body shop to have a fender straightened, and when you get it back, your taillight is shattered. Again, the whole matter started with a contract-your promise to pay the shop owner for specific services. The duty that he breached was to not otherwise damage your property in the process.

Fraud and Deceit

Cases of fraud and deceit most often begin with a contract. Trickery in the marketplace is ancient and takes different forms as societies and technologies change. The ways people can commit fraud are so varied, even small claims courts, where everything is ordinarily informal, require that fraud claims be spelled out and proven very specifically.

The requirement of specificity protects anyone charged with fraud, because it is so easy to make a false claim of it and ruin a person's business reputation.

To win a fraud case, you need to prove all of these elements:

  1. That the offending party made a false representation to you.

  2. That at the time the false statement was made or deception done, the offender knew it was false. This means the falsehood was intentional, or at least made with a reckless disregard for the truth, not just negligence.

  3. That at the time the misrepresentation was made, the offender intended that you rely on it.

  4. That you did rely on it.

  5. That you were damaged because you relied on it.

As you can see, this is by far the most legally technical type of case to prove in small claims court. But because scams are forever causing people misery, these claims often come up.

If you are accused of fraud and are defending against it, if there is no evidence to prove any one of the five elements listed, you should win.

While fraud usually involves the use of statements to deceive (for example, "This car has only 20,000 miles on it"), it can be committed by acts or even failures to act, such as failing to tell a customer any known defects about a car before a sale. For example, the car in question has been totaled twice and the front axle was taken from a 1946 Ford pickup and "doesn't fit quite right."

A claim of fraud cannot be based on statements about the future, because no one can see that far. And you cannot be deceived when you know that the representation made to you is false, or that it is too outrageous to be believed. It is unfortunate, but most fraud is perpetuated by playing on the victim's greed. The deceiver offers a deal that is just a little too good to be true. And it is. Again, the court will not be put in the position of protecting people from themselves. You simply need to be cautious in your business dealings.

Punishing the Fraud

The crux of fraud is intending to deceive and doing it successfully. Taking the defrauder to court gives you the chance to get even, and more. Because it is so nasty, you can get an additional award of damages called punitive damages (also called exemplary damages, to make an example of the offender) on top of those actual damages you can prove you lost because of the fraud. Punitive damages are awarded to prevent the wrongdoer from repeating the wrongful deeds or anything similar to them.

How much in punitive damages can you ask for or expect to receive? It is within the discretion of the judge to award them in the first place and to decide on the amount. This discretion will be exercised based on the circumstances of each case. Your best offense is to lay out all the facts and to be specific in describing all the ways the fraud has affected you. The top limit of the total damages you can win is the top limit of the court's jurisdiction.

In your Complaint, Statement of Claim, or Petition for Relief, you can ask for punitive damages in an amount, which, when added to the damages caused directly from the fraud, does not exceed the total amount your court has the power to award. If you think you deserve more, go to a different court to ask.

Those who have been cheated, or believe they have, often come to court with a big load of emotional baggage-they are very angry. If you are one of them, remember, it is just the facts and just the law that will propel you to victory. Settlement may still provide you with your best legal outcome.

You may find combinations of tort and contract cases in any of the following situations where the duties in a contract are not done, or are done improperly, and damage results:

  1. A landlord has a general duty to keep the rented premises safe from known dangers. It's the same for shippers and truckers and their cargo.

  2. Bus and cab drivers have a duty to transport their passengers safely and within the law.

  3. Beverage bottlers and food packagers have a duty to keep foreign substances out of their products.

  4. All people who supply services have a duty to perform them in such a way that other people and their property are not damaged. Painters, carpenters, repair people, plumbers, and exterminators cannot leave their tools lying around where kids can get at them. Veterinarians should not kill your pets while they are trying to cure them. Dry cleaners, auto mechanics, and the person in the fixit shop also have a duty to perform their jobs properly.

  5. Manufacturers of all kinds, from the crafter at the weekend show to the multi-national conglomerate, have a duty to make their products safe to the consumer.

  6. Businesses have a duty to their customers to keep their premises safe from known dangers. This is why you sometimes see "Caution: Slippery When Wet" signs around a store even when there is nothing wrong with the floor.


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