Contract Definition, Elements, Terms and Contrast Between Tortious and Contractual Liability

A contract is a legal agreement between two or more entities. It is a written document followed by demands, consequences and terms. Any agreement considered to be legally binding and becomes a contract when three conditions are met. Those conditions are offer and acceptance, intention to create legal relation and consideration. If one of these conditions is not met then the contract is not legally binding and it cannot be enforced on the other party in a court of law.

A contract comprises of terms and representations. Terms are contextual statements that become binding whereas representations are statements which might induce a contract but are not terms of a contract. Contract may be terminated in four ways: through performance, breach of contract, frustration and through another contract. Mostly where contract is terminated by performance, the performance is 100%. Complete. If a serious term of a contract is breached then the affected party can terminate the contract. When the conditions are such that contract becomes impossible to perform then the contract is terminated due to frustration. Parties of the contract may enter into another contract with mutual consent and can terminate the previous contract.

Torts are wrongful acts causing loss, damage or harm to another's "body, property, or legal rights" usually caused by a breach of law. A tort is a civil wrong, and the wronged person sues in civil court for compensation or an injunction against repetition. On the other hand, contractual liability exists when there is a contract that voluntarily binds parties together. Tort law like contractual law applies to both persons and companies. The difference is that in contractual liability, only one of the two parties can sue the other one for damages and compensation whereas in tortuous liability, there may be a third party (who are not included in any sort of contract) may also sue to receive damages in a court of law.