Definition of a Business Tort and when it occurs
A business tort occurs when an act is committed against another business that causes some sort of economic loss. It is a harm against the business and not a harm performed against a person or property. Usually a business tort will involve some sort of interference with your business. This can come from creating a monopoly, unfair competition (trademark law), or may be interference with a business contract.
Torts in general are civil wrongs committed against a person or property. These types of wrongful acts saturate society and can be found in society everyday. However, business torts are ancillary to the main hub of tort law. It is a tort in the sense of a wrong committed against the business functioning properly. As discussed above, this comes in the form of interference. Interference with business deals, intellectual property (IP), and generally any actions that preclude a business from functioning in its normal ways.
A business tort can occur from a third party intentionally committing a wrong. This occurs when the third party knows that what they are doing will interfere with the business and its functioning. Tort law is unique due to the fact that you can be found guilty of a business tort based on many factors. It does not take knowing intentional acts to be charged with a business tort. Being reckless or even negligent can bring to fruition a charge of business tort. Acting negligently in business dealing can prove to be very detrimental to you or your business, because down the line you may be sued for negligent interference of someone’s business.
In order to make it clear what a business tort is in the tort realm, we can use an example. Trade secrets can be used in most businesses. It must be something that is actually secret, can be protected, and reasonable precautions are taken to protect the trade secret. If a third party enters, whether a person or another business, and misappropriates the trade secret, then the business would have a clear path to claiming a business tort.
Being vigilant as a business is important to avoid any claims against you involving this tort. It does not take much to interfere with a contract or IP. Whether it is done intentionally or not does not matter. That is why when dealing with other businesses it is important to avoid, misappropriation, interference in business deals, or any form of defamation, libel (written statement) or slander (spoken statement).
There are certain remedies that will follow a business tort. These remedies are usually pretty generic to the world of tort law. The injured party can receive money damages for the losses that they incurred based on the violation of the third party. Money damages and lost profits can come in the form of trademark infringement. The damages can be proven by showing the amount of goods that were not sold because of the similar item or product that was infringing. Damages will usually try to put the injured party back to where they were or make them whole.
Tort law is unique due to the fact that you can sue for punitive damages. This differs from most areas of law. For example, in contract law you can only be made whole or put in the place where you should be. In contrast, tort law allows you to punish the wrongdoer for their actions. Punitive damages can range in amount from minuscule to extremely hefty amounts of money. This is why it is so important to put checks into your business to avoid any negligent or reckless behavior that could equate to a business tort.
Another form of damages that is often used is an equitable remedy. It usually means an injunction. Injunctions are used all the time in law and especially in tort cases. They are utilized in IP infringement cases. Usually implemented to preclude the other side from continuing their infringement.
Business torts play a large role in the business world. They are in place to protect and enhance business activity in a fair way. Also, torts will keep the market free from infringement that would usually go unpunished.