After reading this chapter, you should understand the following:
The two legal cornerstones of business relationships are contract and tort. Although both involve the concept of duty, creation of the duty differs in a manner that is important to business. The parties create contract duties through a bargaining process. The key element in the process is voluntary consent; individuals are in control of a situation because they have the freedom to decide whether to enter into a contractual relationship. Tort duties, in contrast, are obligations the law imposes, whether or not the parties like it. Despite the obvious difficulty in controlling tort liability, an understanding of tort theory is important because it is a critical factor in strategic planning and risk management.
This chapter offers a condensed version of Chapters 8 through 19. If you wish to explore an area in greater detail, many of these issues are treated much more extensively in those chapters.
