The Lottery of Contractual Risk Allocation and Proportionate Liability

Abstract

The article explores the relationship between the contractual standard of duty requiring the exercise of care and the imposition of a duty of care in tort. One aspect of that relationship has become a matter of considerable importance in the application of the proportionate liability provisions of the Australian civil liability legislation. Although that legislation applies to claims for purely economic loss and property damage ‘arising from a failure to take reasonable care’, recent decisions have held that requirement to be satisfied by the careless breach of a strict duty. This article argues that this approach is wrong and undesirable.

Keywords: contract, concurrent liability in tort and contract, proportionate liability, purely economic loss in tort, negligence

JEL Classification: K10, 12, K13, K30