Legal Memorandum: Negligence Claim in AL

Issue: In Alabama, can a negligence claim be based on breach of contract?

A negligence claim may be based, on the failure to fulfill a contractually required act. See Morgan v. South Cent. Bell Tel. Co., 466 So. 2d 107, 114 (Ala. 1985) (negligence liability exists whenever misperformance of the contract involves a foreseeable, unreasonable risk of harm to the interests of plaintiff); First Ala. Bank v. First State Ins. Co., 899 F.2d 1045, 1069 (11th Cir. 1990) (when one contracts to do an act he is liable in both tort and contract when his negligence injures the other party).

A “satisfactory” due diligence review implies that a company would conduct the review such that a reasonable person would regard it as satisfactory.  See Restatement (Second) of Contracts § 228.

Further, a due diligence review is subject to the additional duty of good faith and fair dealing, which Alabama law implies in every contract and imposes on both parties.  See Chavers v. National Sec. Fire & Cas. Co., 405 So. 2d 1, 4 (Ala. 1981).  This obligation provides that neither party will interfere with the rights of the other to receive the benefits of the agreement.  Id. at 4.

[…]