Businesses of all sizes in many different industries have faced a countless amount of struggles in 2020 alone. Despite this, it’s imperative that business owners remain aware of potential conflicts that could arise and hurt or derail operations even further. Having a good understanding of the several different types of business torts that could arise and what they entail can help business owners be aware of potential threats to their company.
What are Business Torts?
Also known as an economic tort, a business tort refers to a wrongful action taken against a business intending to cause it harm. These specific types of torts may result in lost profits, negatively affected reputation, loss of competitive advantage, and loss of market share, among other issues. Business torts can be committed intentionally by a competing business or they can be the result of negligent behavior by individuals or other companies.
Various tort laws serve two basic purposes – to compensate a victim for any losses caused as a result of the action and to deter them from making the same violation in the future. Some of the most common types of business torts include the following:
Tortious interference can happen prior to a contract being formed between two parties and is the deliberate and unlawful interference within a company’s contractual dealings or business relationships. Such interference with a contract can happen when a third-party intentionally causes a contracting party to commit a breach of contract or when the third-party disrupts the ability of another to perform their obligations under the contract. This results in the business not receiving the performance promised within the contract terms.
Restraint of Trade
Restraint of trade is a type of economic injury involving meddling with a business’ ability to conduct business freely. This can refer to any activity that limits sales, trade, and transportation via interstate commerce, or otherwise severely affects interstate commerce. Additionally, different businesses and individuals must not partake in certain actions or enter into agreements that would result in another business ceasing to operate as normal.
Injurious falsehood is an intentionally false statement made in order to cause damage to another business. Injurious falsehood is classified as a business tort, as false statements can damage a person’s business reputation or the reputation of a business as a whole. In order to prove an injurious falsehood occurred, malice must be proven – that the individual or competing business knew the statement was false when it was made.
Unfair competition refers to the competing of two businesses on unequal terms as a result of favorable or disadvantageous conditions that had been applied to some competitors, but not others. Additionally, unfair competition can also be found in situations where the actions of certain competitors harm others by preventing competition on equal terms.
Fraudulent misrepresentation is deliberate deception in order to secure unfair or unlawful gain. The intent behind this business tort makes it one of the most deliberate types of misrepresentation that carries severe penalties. Fraudulent misrepresentation can be any act that would ultimately deceive another person or business including gestures, innuendos, half-truths, or even silence.
Business torts can cause serious harm to the reputation of a company, as well as its day-to-day practices. The experienced commercial litigation attorneys at Feldman & Feldman can help ensure your business is protected when the unexpected happens. At Feldman & Feldman, we know that business litigation requires strategic and effective legal strategies in order to hold the responsible parties accountable. If you believe your business has suffered due to a business tort caused by another operation or individual, contact our offices today to see how we can help.