Impact of Tort of Negligence and Contract Law on Amazon.com

This article explores the impact of tort of negligence and contract law on Amazon.com, including changes needed to comply with Australian legislation. It discusses the similarities and differences between the two laws, and how they relate to Amazon's contracts with small businesses. The article also examines the potential impact of Amazon's entry into the Australian market on local retailers.

Investigate how the tort of negligence and contract law have an impact on Amazon.com.
Contract law is the body of rules governing the contractual agreements that take place between
persons or businesses. In this context, a new contract has been described as an agreement that has
been finalized between the parties in which outlines the duties and responsibilities of the parties
towards each other. A contract can be formed regarding any type of transaction. In this way, the
contract law deals with various transactions related with sale of goods and services. The law of
contract provides what can be included in a contract and what cannot be added and similarly the
remedies that may be available to the other party in case of a breach of contractual obligations by
one party. As compared to it, the tort law is related with the situations where one person has
caused harm or injury to the other person. In this way, the tort laws cover the violations, where,
has been caused to the other party intentionally like battery.1 Tort law also deals with the
incidents where a party can be held liable even if it had not acted intentionally writing cases of
negligence or strict liability claims. Generally tort laws resulted in the paying of monetary
damages by the liable party as compensation for the loss suffered by the other party.2
It is regard, there are certain similarities present between contract law and tort law. At the most
basic level, both these laws are generally related with the duty and a breach of such duty. In case
of the breach of a contract, the violation is related with the duties that have been prescribed by
the contract. While it may be mentioned in the contract that it is the duty of one party to pay the
other party for the repair services provided by such a party and at the same time, the other party
1 Maureen, Brunt, ‘“Market Definition” Issues in Australian and New Zealand Trade Practices Litigation’ (1990) 18
Australian Business Law Review 86
2 J Dianne, Brinson, ‘Proof of Economic Power in a Sherman Act Tying Arrangement Case: Should Economic
Power Be Presumed When the Tying Product is Patented or Copyrighted?’ (1987) 48 Louisiana Law Review 29

was going to provide the repair services. Therefore if any of these parties failed to perform its
obligations under the contract, a suitable remedy may be available under the contract law.3
In case of most of the violations of the tort law there is a breach of duty. For example, personal
injuries may take place as a result of the breach of duty by the other party, which requires such
party not to cause harm to the other person.4 There are certain relations in which a duty of care is
imposed on a party like it is the duty of the shopkeeper to maintain the premises properly so that
it remains safe for the visitors to the shop. An award of damages can be obtained in case of
contract as well as for the violation of tort law. Damages can be described as the monetary
payment that is tabled by the liable party regarding the losses that may be suffered as a result of
the breach.
It needs to be noted that while there are several similarities present between the law of contract
and the law of tort, there are also certain basic differences present between the two. One of the
most significant difference is that exists between the law of contract and tort law is related with
the issue of consent. While in case of contract law, the parties enter into the contract knowingly
and without any coercion to do so. For the purpose of creating a valid contract, among other
things, it is also necessary that the parties should give their consent to the outcome of the
contract as mentioned in the document.5 The meaning of this requirement is that a party cannot
be forced to enter into the wanted by the other party without its free will.6 As a result, in case of
3 Tom W, Bell, ‘Escape From Copyright: Market Success vs Statutory Failure in the Protection of Expressive
Works’ (2001) 69 University of Cincinnati Law Review 741
4 Julie E, Cohen, ‘Copyright and the Jurisprudence of Self-help’ (1998) 13 Berkeley Technology Law Journal 1089
5 Richard Cornes, and Todd, Sandler, The Theory of Externalities, Public Goods and Club Goods (Cambridge
University Press, Cambridge, 1986).
6 Lothar Determann, and Aaron Xavier, Fellmeth, ‘Don’t Judge a Sale by its License: Software Transfers under the
First Sale Doctrine in the United States and the European Community’ (2001) 36 University of San Francisco Law
Review 1

contract, generally the damages are related with the mistake or misunderstood in the parties
because the parties are typically aware of the nature of transaction that they're going to enter
through the contract.
On the other hand in case of tort law the indirection is never based on consent. Generally torts
involve an intrusion by one party in the health, safety or the privacy of the other party. Therefore,
if consent is given by the victim to the tortuous act, it may result in providing a defense to the
other party, as a result of which the party may not be able to recover damages.7 This difference
related with consent can be seen in the way in which damages awarded by the courts. Therefore,
in case of contract, the purpose of awarding damages by the court is to store the parties to the
original position in which they were before the breach of the contract.8 On the other hand in case
of a claim under tort law, generally the damages awarded for compensating the victims for the
loss of injuries suffered by it. Sometimes, punitive damages are also awarded under the tort law
for the purpose of managing the defendant. However, you damages are not generally issued in
case of a claim under the contract law.
For example, Amazon has told that it is going to change its contracts for small businesses so that
it can fulfill the Australian rules. The Australian authorities have also written to Amazon in other
to make sure that the company complies with the unfair contract term legislation of Australia.9
According to the terms and conditions of Amazon, the company always reserves the right of
refusing service, terminate rights to use, terminate accounts or to remove or edit content at its
7 Richard A, Epstein, ‘Intellectual Property: Old Boundaries and New Frontiers. Addison C Harris Lecture’ (2001)
76 Indiana Law Journal 803
8 Gillian K, Hadfield, ‘An Incomplete Contracting Perspective on Fiduciary Duty’ (1997) 28 Canadian Business
Law Journal 140
9Anne Fitzgerald, and Cristina, Cifuentes, ‘Pegging Out the Boundaries of Computer Software Copyright: the
Computer Programs Act and the Digital Agenda Bill’ in Anne Fitzgerald et al. (eds) Going Digital 2000 (2nd ed.,
Prospect Media Pty Ltd, St Leonards, 2000).

sole discretion. However, it can be considered as unfair, because in this case, one party, Amazon
can take action, but the other party, the vendor cannot take action to terminate the contract. As a
result, the authorities in Australia have passed the Amazon to review these terms and conditions
that are going to be used by the company in case of standard form contracts related with its
operations in Australia in order to make sure that the company follows the unfair contract terms
legislation. As a part of its big push, Amazon is opening up opportunities for a large number of
businesses in Australia to sell at home and abroad by using Amazon Marketplace. The
authorities in Australia considered the pending arrival of Amazon marketplace in the country as
an opportunity for a large number of small businesses to compete online and also to significantly
extend their reach.10 But at the same time, the company needs to remember that it is obligation
according to which. It should be the small businesses in Australia fairly and according to the
Australian laws. While there are certain businesses that are concerned with the threat of
competition, there are many other businesses that are excited to follow the opportunity that is
going to be offered by Amazon.11
In case of the consumers, Amazon Marketplace promises to offer extended choice and also to put
downward pressure on prices of goods. The authorities will be particularly interested in seeing
how the small businesses in Australia will be able to accelerate sales and widen their customer
base by using the Amazon platform.
After an analysis of the contract used by Amazon Marketplace, it can be suggested that the
contract needs to be changed so that it complies with the federal legislation in Australia. As a
result of the reaching changes made in the Australian consumer law introduced for the purpose
10 David D, Friedman, William M Landes, and Richard A Posner, ‘Some Economics of Trade Secret Law’ (1991) 5
Journal of Economic Perspectives 61
11 Gillian, Hadfield, ‘The Second Wave of Law and Economics: Learning to Surf’ in Megan Richardson and Gillian
Hadfield, (eds) The Second Wave of Law and Economics (The Federation Press, Sydney, 1999).

of protecting small businesses from unfair terms related to this standard form contracts, these
changes become more important.12 In this context, a standard form contract can be described as
the contract that has been prepared by one party alone and the other party did not have any
chance of negotiating the terms of the contract. In the same way, and unfair term can be
described as the term that results in a significant imbalance in the rights and obligations of the
parties and results in causing a loss to small business if such a term was applied or relied upon.13
Sometimes, the question has been asked if a party can file a claim under contract law and also
under the tort law in the same lawsuit. Generally, it needs to be noted that there is a big
difference present in the claim under contract law and the claim under tort law due to which
these two claims have been filed separately. In this regard, an example can be given of a case
where a contract has been breached by a party and the other party becomes angry and assaults
the person who has violated the terms of the contract. Therefore in such a case the issue of the
breach of contract needs to be considered in one lawsuit and there should be another lawsuit,
which deals with the claim for assault. While on one hand, there can be certain cases where a
claim under tort law and a contractual claim can be so intertwined with each other that they may
need to be heard by the court in the same lawsuit. Generally it is required that the tort should
affect the subject matter of the contract for the purpose of the two suits to be filed concurrently
and at the same time. For example, the swords may be filed concurrently in case of a breach of
contract and at the same time, for fraud. In such a case the reason for doing so is that the breach
of contract is based on the fraudulent conduct of the other party.
12 David, Friedman, ‘In Defense of Private Orderings: Comments on Julie Cohen’s “Copyright and the
Jurisprudence of Self-Help”’ (1998) 13 Berkeley Technology Law Journal 1151
13 Joshua Gans, Philip Williams, and David, Briggs, Clarifying the Relationship between Intellectual Property
Rights and Competition, report prepared on behalf of the National Copyright Industry Alliance for submission to the
Review of Intellectual Property and Competition (April 2000).

It is expected that the entry of online retail giant, Amazon will be going to change of face of
shopping in Australia. However, it is estimated that, mainly the major retailers will have to face
the wrath of the move made by Amazon. On the other hand, there are many experts who claim
that the entry of Amazon is going to be really good for independent brands. There will be a
situation where such brands can move on from selling on their own websites to selling the
products on Amazon site simultaneously.14 The result will be that a whole lot of new customers
will be effectively introduced by Amazon, which will be to potential customers for these brands.
In this way will be a big opportunity for the local retailers to engage themselves with, the online
retail giant Amazon.
At the same time, it is also true that there will be a price war. It has been shown by the history
that was probably the retailers in Australia will not be able to win the Christmas price war with
Amazon. The reason is that the company brings volume of purchasing and at the same time it
also results in bringing down prices. The reason is that Amazon has the long pockets.
Effectively, the Australian retailers will be competing with a company that has much more
money and also the ability to drive prices down for a longer period.15 It is a very tricky issue to
go into a price war with Amazon. At the same time, deep pockets are required to stay in the
game.
In this way the online retail giant Amazon will going to have a major impact on the retailers in
Australia. These impacts will be positive and also negative.. However, the company will be
14Wendy J Gordon, ‘Excuse and Justification in the Law of Fair Use: Commodification and Market Perspectives’ in
Neil Netanel and Niva Elkin-Koren (eds) The Commodification of Information: Social, Political, and Cultural
Ramifications (Kluwer International, forthcoming 2002).
15 Wendy J, Gordon, ‘On Owning Information: Intellectual Property and the Restitutionary Impulse’ (1992) 78
Virginia Law Review 149

required to change its terms and conditions in order to deal with the impact of contract and tort
law in Australia.

Bibliography
Bell, Tom W, ‘Escape From Copyright: Market Success vs Statutory Failure in the Protection of
Expressive Works’ (2001) 69 University of Cincinnati Law Review 741
Brinson, J Dianne, ‘Proof of Economic Power in a Sherman Act Tying Arrangement Case:
Should Economic Power Be Presumed When the Tying Product is Patented or
Copyrighted?’(1987) 48 Louisiana Law Review 29
Brunt, Maureen, ‘“Market Definition” Issues in Australian and New Zealand Trade Practices
Litigation’ (1990) 18 Australian Business Law Review 86
Cohen, Julie E, ‘Copyright and the Jurisprudence of Self-help’ (1998) 13 Berkeley Technology
Law Journal 1089
Cornes, Richard and Sandler, Todd, The Theory of Externalities, Public Goods and Club Goods
(Cambridge University Press, Cambridge, 1986).
Determann, Lothar and Fellmeth, Aaron Xavier, ‘Don’t Judge a Sale by its License: Software
Transfers under the First Sale Doctrine in the United States and the European Community’
(2001) 36 University of San Francisco Law Review 1
Epstein, Richard A, ‘Intellectual Property: Old Boundaries and New Frontiers. Addison C Harris
Lecture’ (2001) 76 Indiana Law Journal 803
Fitzgerald, Anne and Cifuentes, Cristina, ‘Pegging Out the Boundaries of Computer Software
Copyright: the Computer Programs Act and the Digital Agenda Bill’ in Anne Fitzgerald et al.
(eds) Going Digital 2000 (2nd ed., Prospect Media Pty Ltd, St Leonards, 2000).
Friedman, David D, Landes, William M and Posner, Richard A, ‘Some Economics of Trade
Secret Law’ (1991) 5 Journal of Economic Perspectives 61

Friedman, David, ‘In Defense of Private Orderings: Comments on Julie Cohen’s “Copyright and
the Jurisprudence of Self-Help”’ (1998) 13 Berkeley Technology Law Journal 1151
Gans, Joshua, Williams, Philip and Briggs, David, Clarifying the Relationship between
Intellectual Property Rights and Competition, report prepared on behalf of the National
Copyright Industry Alliance for submission to the Review of Intellectual Property and
Competition (April 2000).
Gordon, Wendy J, ‘Excuse and Justification in the Law of Fair Use: Commodification and
Market Perspectives’ in Neil Netanel and Niva Elkin-Koren (eds) The Commodification of
Information: Social, Political, and Cultural Ramifications (Kluwer International).
Gordon, Wendy J, ‘On Owning Information: Intellectual Property and the Restitutionary
Impulse’ (1992) 78 Virginia Law Review 149
Hadfield, Gillian K, ‘An Incomplete Contracting Perspective on Fiduciary Duty’ (1997) 28
Canadian Business Law Journal 140
Hadfield, Gillian, ‘The Second Wave of Law and Economics: Learning to Surf’ in Megan
Richardson and Gillian Hadfield, (eds) The Second Wave of Law and Economics (The Federation
Press, Sydney, 1999).