A business tort is a type of legal violation involving wrongdoing in a business setting or relationship. This type of tort typically covers legal disputes involving improper and intentional interference with another party’s business interests. Sometimes, this area of law overlaps with contract law. Business torts can result in various losses, including:
- Loss of business opportunities;
- Loss of business clients;
- Damage to, or loss of, business relations; and/or
- Loss of business ideas or protected works (such as trade secrets or copyrighted material)
Calculation of losses or business damages may be complex; courts may require various forms of evidence and in some cases may use an expert witness to help sort out losses and damages.
Business torts are not the same as personal injury torts. Personal injury torts involve injury or harm done to a person’s body or property damage, such as an assault or a car accident.
Business torts can take many different forms. Some common example of business torts are:
- Wrongful Interference: This occurs when a third party intentionally interferes with business relations, such as contracts and negotiations, between two parties.
- Disparagement: This happens when the defendant disseminates false statements about the quality of a company’s products or goods. As a result, the company loses business and experiences losses. The types of false statement include fake reviews, libel, and slander.
- Unfair Competition: This is where a defendant misappropriated the plaintiff’s intellectual property, such as a trademark or slogan, or puts out a product that is intended to confuse customers into thinking that the plaintiff put out the product. The plaintiff usually files a trademark or copyright infringement lawsuit.
Various parties can be held liable for business parties. In some case, multiple persons can be involved in a single violation, especially where the tortious conduct has been specifically planned on by a group of persons.
Remedies in a business tort action typically involve monetary damages. This means that the defendant is obligated to pay the plaintiff money to compensate the plaintiff for any financial losses that the plaintiff’s business suffered. The court calculates losses such as:
- Loss of business reputation;
- Loss of profits that are calculable with reasonable certainty; and
- Punitive damages (damages that are intended to punish the defendant for particularly egregious or harmful conduct).
Another category of remedies is called equitable remedies. This involves the court issuing an injunction or an order, which tells the defendant to either take certain actions or to stop certain conduct. An example of this is where the court compels the defendant to stop using material that has already been copyrighted by the plaintiff.
Depending on the case, there may be various factors that can affect or reduce the plaintiff’s damages award. For instance, one type of business tort is a theft of trade secrets. This occurs when a person steals or obtains confidential business information without the other party’s consent. If it turns out that the “trade secret” is actually public, well-known knowledge, it may affect the plaintiff’s ability to collect damages.
In other cases, consent can be a defense to a business tort. For instance, if the other party actually consents to the use of the business information or knowledge, the plaintiff might not be able to recover damages. If the party had consented to the use of the information, knowledge, or trade secrets, it could affect the case.
Lastly, if the plaintiff waits too long before filing a lawsuit, they may be prevented from filing the suit and collecting damages. Business torts may be subject to a statute of limitations, or a filing deadline for the lawsuit. The deadline for filing may depend on state and local laws.
A company is just like a person, in that any harm caused to it needs to be remedied. If your company has been harmed by a business tort, it is best to talk with a business attorney near you about pursuing remedies for your company. Your attorney can provide advice and representation for your case.