Also known as: negligence in contract law · negligent breach of contract · negligence vs breach of contract
Negligence in contract law is the failure to use reasonable care while performing a contractual duty, which can create liability separate from the contract's own terms.
Negligence in contract law arises when a party performs its contractual obligations carelessly and causes harm, giving the other side a claim that sounds in tort (negligence) rather than pure breach of the contract's terms. For a startup, this distinction is what your liability insurance turns on: Tech E&O and general liability policies are built to respond to negligent acts, errors, and omissions, while a straight breach of contract is often excluded or narrowly covered. In practice, an enterprise customer alleging that your defective work damaged them will usually frame it as negligence precisely because that is what your coverage and your indemnity obligations are designed to address.
Negligence in contract law is the failure to exercise the reasonable care expected when performing a contractual duty, causing loss to the other party. Unlike a plain breach of contract, it is treated as a tort, which matters because liability insurance like Tech E&O and general liability is designed to cover negligent acts, errors, and omissions.
A breach of contract is simply failing to do what the contract required, while negligence is doing the work but without reasonable care, causing harm. The difference is important for insurance because most liability policies cover negligence-based claims but limit or exclude coverage for a pure breach of the contract's promises.
Generally yes. Technology Errors & Omissions covers claims that your professional services or product were performed negligently, and general liability covers negligence that causes bodily injury or property damage. What is usually not covered is a bare breach of contract or a warranty you gave that goes beyond your duty of reasonable care.
Definitions are educational and may be modified by your specific policy language, endorsements, and state rules. For regulatory guidance, refer to the California Department of Insurance or the NAIC.
Last updated: July 2026.