Business torts encompass a broad range of legal claims, all of which involve wrongs committed against a business entity. Like personal torts, they involve both negligent and intentional conduct.
Unlike personal torts, business torts involve more complexity in proving economic damages and generally do not involve noneconomic damages such as pain and suffering or emotional distress.
The Legal Framework for Business Torts
Both statutory law and common law (i.e., case law) establish the legal framework for business torts.
State and federal statutes allow for claims by and against businesses for certain wrongful conduct. Oregon’s Unlawful Trade Practices Act and Washington’s Consumer Protection Act are two examples—both acts address theft or misappropriation of trade secrets. Federal statutes also cover unlawful trade practices and trade secret misappropriation. Additionally, both state and federal statutes cover fraudulent conduct, such as The Securities Act of 1933 or the Racketeer Influenced and Corrupt Organizations Act (RICO) and their state-level counterparts.
Examples of business torts include:
- Interference with business or contractual relations
- Misappropriation of trade secrets
- Fraud and misrepresentation
- Unlawful trade practices
- Business defamation
- Securities fraud
- Breach of the covenant of good faith and fair dealing
- Breach of fiduciary duty
From a public policy standpoint, these torts are available to help ensure fair and healthy competition while deterring damaging or unfair practices.
Types of Damages
Business torts seek to recover both immediate and long-term economic damages. They also frequently involve reputational harm. Extensive damages may be available to compensate for these losses. Depending on the basis for the claim, punitive damages (intended to punish and deter wrongdoing) may provide a significant source of additional recovery.
Preparation is Protection
Business torts are a complicated and nuanced area of business law. How a company initially responds to the problem when it arises is sometimes determinative of the outcome. Business agreements often contain provisions that, if not identified and analyzed early on, can hinder a wronged party’s claim. Likewise, early advice and strategic action is necessary to gather or preserve the right evidence. In business litigation the stakes are high, so when negotiation cannot resolve a dispute, litigation may be necessary to resolve these claims. Securing knowledgeable legal counsel is essential for protecting your business, whether asserting or defending against a business tort claim.
