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What is a Business Tort?
Definition & Common Types Explained

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Tort refers to inflicted harm, whether it’s done deliberately or accidentally.  A tort can be a result of a previous intent or negligence. If someone tries to harm your business in any way, you have a business tort case. Schmidt & Clark layers are experienced in dealing with different types of torts and have helped countless individuals and businesses.

If you suspect you may have a business tort claim, here’s everything you should know.

Summary of the Key Findings

  • A business tort is a harm inflicted to a business, either intentionally or due to negligence.
  • There are several kinds of business torts. A lawyer will know which one your case falls under.
  • You can get three different kinds of damages for a business tort.

What is a Business Tort?

Inserting money in suit front pocketBusiness torts refer to wrongful acts done against a business with the intent to harm it.

They are also referred to as economic torts because there’s often a loss of profits.

Business torts can be intentional or a result of negligence or recklessness of individuals or other businesses.

They cause financial harm to the business, negative reputation, loss of market share, and other issues [1].

Business tort happens because of a trade libel, trade secrets, conspiracy, or other civil offenses.

Suggested Article: What Is a Class Action Lawsuit?

“Generally, every claim that arises in civil court, with the exception of contractual disputes, falls under tort law. The concept of tort law is to redress a wrong done to a person and provide relief from the wrongful acts of others, usually by awarding monetary damages as compensation.” Investopedia

A business tort is usually not charged as a criminal offense, although that can also happen. If a business has been injured because of a negligent or intentional act, the owner can file business tort lawsuits and seek damages in civil court. 

To be able to file a business tort, the plaintiff has to:

  • Show the defendant had a responsibility to act in a professional way
  • Show the defendant didn’t follow the responsibility
  • Because of the defendant’s actions, the plaintiff suffered measurable financial losses

5 Types of Business Torts

There are several types of business torts:

1. Tortious Interference

Tearing contract paper in half Tortious interference happens when one party interferes with the contract or before the contract is formed between two parties.

In other words, this is an unlawful interference that harms a company’s business relationships. 

This can happen when one party intentionally makes one of the contracting parties commit a breach of contract or interfere with the party’s ability to fulfill their contractual obligations.  The business doesn’t receive the performance they were promised in the contract. 

For example, if another party damages your business relationship with your supplier, this is seen as tortious interference, and you have the right to seek damages.

2. Restraint of Trade

Locked in chain Restraint of trade involves meddling with the ability of one company to conduct business freely.

Other businesses and individuals are not allowed to take actions that would harm a business or make it unable to operate normally. Restraint of trade can refer to sale, trade, transportation limits, and more. 

Note: There’s a lawful exception to restraint of trade, and that’s a non-compete agreement.

3. Fraudulent Misrepresentation

Fraudulent misrepresentation is a deliberate deception, such as a statement of falsehood, that’s designed to trick a party into a contract or secure unlawful gain. One party misrepresents its position in a contract, so the other entity suffers damages.

This is a breach of a good faith agreement, and a consequence is severe penalties.  There are grounds for a civil claim, and the injured party can get damages.

4. Trade Libel

Stressed and overthinking person from reading a libel against himThis is a type of defamation and can suffer from emotional distress. It happens when an individual or a business intentionally publishes a false and damaging statement about products or services that hurts the other business’s reputation.

As a result of trade libel, a business losses revenue, and profitability.

Damages can be pursued under civil law as long as you’re able to prove the loss of revenue stemming from trade libel.

This is similar to commercial disparagement. The difference is commercial disparagement is about defamation that doesn’t need to be in print.

5. Theft of Trade Secrets

Theft of trade secrets is stealing proprietary business information to get an advantage over a competitor. To file civil claims for theft of trade secrets, you have to prove steps were taken to protect the secrecy of the data.

Also read: What is a Mass Tort?

Compensation for Business Torts

Dollar bills falling

In successful business tort cases, you’ll get compensation. Common business tort damages include:

  • Compensatory damages — The amount of time and money you need to take your business back to the state from before the damage happened.
  • Punitive damages — You can get these damages when the other party acted negligently or maliciously. 
  • Injunctive relief — The order that prohibits the other party from continuing with the damaging behavior is issued.

Hire an Experienced Law Firm and Restore Your Company’s Reputation

If you file a business tort, not only can you get monetary damages, but you can also reverse the damage done to your company’s reputation.  Most importantly, you can protect your business from future attacks, as the offending party can be ordered to withdraw the false statement and sign non-compete agreements. 

Moreover, you can even get a restraining order so the offending party can’t interfere with your business in the future. To protect your intellectual property and combat false statements, you need a good legal team who knows what legal action to take and what business tort your situation falls under.

Schmidt & Clark will give you legal advice and a free consultation. Contact us today and get legal representation to protect your business.



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