What are Business Torts?

Business torts are civil wrongs that are committed by or against an organization. They frequently involve harm done to the organization’s intangible assets, such as its business relationships with clients or its intellectual property. Some common categories of business torts include fraud, breach of fiduciary duty, and unfair competition.

One of the most common kinds of business fraud is the tort of misrepresentation. Misrepresentation transpires when one party intentionally falsifies a material fact in order to induce another party to perform or refrain from performing in a certain manner. In order to prove misrepresentation, the plaintiff must show that he or she relied on the defendant’s misrepresentation and was harmed as a result. Other types of business fraud include embezzling company assets, falsifying financial statements, and forging work hours.

A fiduciary is a party who is charged with acting in another party’s best interests. If the fiduciary acts in a way that is adverse to the beneficiary’s interests, breach of fiduciary duty occurs. In the business context, this tort most often surfaces with corporations. Generally, a corporation’s officers and directors have fiduciary duties to their shareholders, and a breach of fiduciary duty occurs if an officer or director acts in a manner adverse to the shareholders’ interests. For example, if an officer engages in insider trading, he would be guilty of breaching his fiduciary duties to the corporation’s shareholders.

A number of business torts fall under the umbrella of unfair competition, which generally occurs when a company acts in a manner that harms another company. Unfair competition is comprised of tortiuous interference, intellectual property infringement, and antitrust issues. Antitrust violations normally occur when a company attempts to push any competitors out of the market by engaging in predatory pricing schemes or by entering into exclusive rights agreements with suppliers.

Intellectual property infringement usually takes place when one company violates another company’s intellectual property rights. Property commonly infringed includes a company’s trademarks, copyrights, and patents. For instance, infringement could occur if a company packages a product so that it looks like the product of a competitor, thereby misleading a consumer into purchasing it.

Tortious interference of business torts can be broken down into two categories: interference with business relationships and interference with contract rights. Business relationship interference occurs when a meddling third party intentionally prevents a company from establishing a business relationship. Interference with contract rights generally takes place when a meddling third party convinces a company to breach its contract with another company. Additionally, it can happen if a meddling party prevents a company from fulfilling its contractual obligations to another company.