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No. 347

June 3, 1999

Restoring the Boundary

Tort Law and the Right to Contract

by Michael I. Krauss

Executive Summary

forbidden to sell certain products--because a

Today courts regularly resolve disputes by

government agency has determined they are

applying tort principles when they should apply

too dangerous--may also be forbidden to sell

the law of contracts. When parties have an

his own labor--because the state has deter-

opportunity to negotiate the terms of their rela-

mined that the wages he would accept are too

tionship, the resultant contracts ought to be

low. Contracts once freely negotiated, and sub-

enforced. Tort law is an acceptable substitute

ject to private suit in the event of fraud or fail-

only if parties have no opportunity to bargain.

ure to perform, are increasingly replaced by

Over the years the boundary between tort

regulation. Unhappily, once government has

and contract has shifted sharply toward tort.

advanced a plausible rationale for prohibiting

For example, physicians serving rural areas are

consensual behavior in one area, its tentacles

often not allowed to contract with patients

inevitably extend to other areas as well.

for a lower price in return for diminished care.

Today's torts "crisis" does not exist because

And courts have allowed consumers who buy

corporations are oppressing individuals, or

cars without air bags to recover from manu-

because we need federal legislation to replace

facturers for injuries that only air bags would

state tort rules. The crisis exists because our

have prevented. Sometimes courts even

rights have been given increasingly less respect

ignore compulsory arbitration provisions that

by government. The crisis exists because we

waive the usual judicial procedures for resolv-

have not allowed tort to be tort, and contract

ing disputes.

to be contract. We need to restore the bound-

Even worse, rules have sprung up that pro-

ary between contract and tort.

hibit ordinary commercial contracts. A person

Michael I. Krauss is professor of law at George Mason University School of Law.