Which statement correctly distinguishes contract law from tort law?

Why A is correct

Contract law concerns voluntary agreements in which each party exchanges promises or value, such as an insurance policy. Tort law concerns civil wrongs and injuries committed against persons or their property, such as negligence or defamation, regardless of whether any agreement existed between the parties. Insurance contracts are governed by contract law, while liability insurance exists largely because of tort law, which imposes duties that people owe to others. The two bodies of law protect different interests and operate under different rules and remedies.

Why the other options are wrong

• B) Tort law is not limited to written agreements between businesses. It covers personal injury and property wrongs broadly, affecting individuals and businesses alike. Tort liability arises from wrongful acts and negligence, not from agreements, and it reaches individuals as well as businesses.
• C) Contract law is civil law about enforceable agreements, not criminal offenses. Criminal law is a separate body of law from both contracts and torts. Criminal law punishes offenses against society; contract law resolves disputes about private agreements.
• D) Contract and tort disputes are heard mostly in state courts. Federal courts hear them only when diversity or a federal question exists, so exclusive federal jurisdiction is wrong. State courts handle most contract and tort cases; federal jurisdiction applies only in limited diversity or federal-question cases.

Memory hook

Contracts = promises you choose to make. Torts = wrongs you must not commit.