What Is a Business Tort?
Business torts, which are wrongful actions that are performed against a business and cause harm to it, come in different forms. As a business owner, it’s important for you to know the different types of torts that you may encounter. This can give you an advantage and enable you to deal well with them and get the best outcome for your business. Here are some of the business torts that you may come across.
This first business tort is an intentional falsehood that is made with the intention of causing harm to a business. This is because false statements can damage the reputation of a person’s business or the actual business. In order to prove this tort, it must be proven that the competing business or individual was malicious and knew that the statement was false when they made it. In 2017, business tort lawsuits accounted for less than 5% of the civil filings made in state courts. This shows that while a bit uncommon, there are still instances where these filings make it to court.
Restraint of Trade
This tort is a type of economic injury that involves interfering with the ability of a business to conduct business freely. It, therefore, covers any activity that limits trade, sales, and transportation by interstate commerce. It could also simply affect interstate commerce in a severe manner. Additionally, businesses should desist from taking part in actions or being party to agreements that would cause another business to stop operating normally in order to avoid this tort.
Unfair competition is simply when two businesses take part in a competition on unequal terms because of conditions that are either disadvantageous or favorable and that have been applied to some businesses but not others. This can also be found in situations whereby the actions taken by some competitors either on marketing or on other fronts harm others by making it impossible for competition on equal terms to take place. This is something that may not be a rare occurrence given that as of 2021 in the United States, for instance, there were 47,114 excavation contractors businesses in operation, according to IBIS World.
Fraudulent misrepresentation is a deception made deliberately with the aim of securing unlawful or unfair gain. This business tort carries severe penalties because it’s one of the most deliberate types of misrepresentation as a result of the intent behind it. This business tort covers many things because it can be a half-truth, innuendo, gesture, or even silence that deceives another person or business intentionally. As Verizon reports that small businesses form 28% of the victims of data breaches, it’s clear that even small businesses are not safe from a business tort like fraudulent misrepresentation. This is because a data breach can expose sensitive aspects of a given business and make it easier to misrepresent in marketing or other areas.
This final tort is the unlawful and deliberate interference in a company’s business relationships or contractual dealings. It can happen before a contract is formed when a third party knowingly causes a contracting party to breach a contract. It can also occur when a third party unsettles the ability of another party to perform their obligations under a given contract. The end result of this is that the business in question fails to receive the performance that was promised within the terms of the contract.
These are just some of the business torts in existence and they demonstrate the importance of seeking legal counsel in your business dealings. You may either save your own business from falling prey to any of them or unknowingly playing a guilty part by taking part in the practices yourself.