Business Torts: What They Are and Why They Matter

Tort laws assign civil liabilities for harm done to you or your property. They enable you to claim compensation from those responsible for your injuries. 

Business tort law allows businesses to seek remedies against individuals or other businesses whose actions cause harm to them. Those remedies may be an award of compensatory damages, punitive damages, or injunctive reliefs.

What Are Business Torts?

Business torts are wrongful acts done to a business that harms the business. Business torts are also called economic torts because they usually result in financial loss. They may cause profit loss, reputation damage, market share decline, and loss of competitive advantage.

Your business can bring a tort claim against those whose intentional actions, negligence, or recklessness caused it any form of loss.

Examples of Common Business Torts

Business torts include many different types of wrongful actions committed against a business. The following are some examples of business torts:

Breach of Fiduciary Duty

 A fiduciary relationship is a special relationship where a person called the fiduciary has an obligation to act in the best interest of the other party, called the beneficiary.

A fiduciary relationship can be created by an agreement between the parties or implied by law. For example, the law assumes the existence of a fiduciary relationship in relationships between attorney and client, principal and agent, shareholders of a company and directors, partners in a partnership etc. 

The fiduciary role is a position of trust. So, a fiduciary must never put their interests above those of the beneficiary. A fiduciary breaches this trust if they intentionally or negligently fail to protect the best interests of the beneficiary. 

A breach of this trust by a fiduciary is a business tort, and the beneficiary can sue the fiduciary for the breach.

Tortious Conduct or Intentional Interference

Intentional interference happens when a person intentionally causes the breakdown of a business relationship you have with a third party. Most cases of interference result in a breach of contract you have with a third party. 

If someone with full knowledge of the existence of a contract between you and a third party induces the third party to breach the contract. The law allows you to claim damages from that person if you suffered any loss because of the breach of contract.

Fraud

Fraud in business tort involves any case where a person is deceptive in your business dealings with them. If a person presents a fact they know to be false and, by relying on it, you incur losses, you can bring a tort claim against them. Fraud also includes intentionally failing to disclose a material fact.

To succeed in a tort claim for fraud, you must prove the following elements:

  • There was an intentional misrepresentation or concealment of a material fact
  • The defendant intended that you would rely on the fact
  • You justifiably relied on the misrepresented fact
  • You suffered harm or financial loss by relying on the misrepresented fact

What Are Remedies for Business Torts?

In a successful business tort lawsuit, your business may be awarded any of the following damages:

Legal Remedies

Legal remedies are also known as damages. Damages are compensation given to a victim of tortious liability for their injuries and losses. They are given to help ease the effect of the breach on the victim. Damages can include general or special damages. 

General damages are intangible and non-monetary losses the victim suffered. An example in business tort is damages for reputational damage. Special damages are damages that compensate for the specific financial loss the plaintiff suffered because of the injury. Special damages must be specifically proven. An example is lost profit.

Punitive Damages

Punitive damages are awarded to punish the defendant in a tort lawsuit. Courts award punitive damages when the actions of the defendant are so odious that the jury decides that general damages will not adequately compensate the plaintiff for their loss. Punitive damage is also called exemplary damage, and the aim is to make an example of the defendant to dissuade similar conduct in the future.

Equitable Remedies

An injunction is the most common equitable remedy granted in tort claims. An injunction is an order of the court compelling a party to perform or to not perform an action. The court awards injunctions when damages are not adequate compensation for the plaintiff’s loss. 

Injunctions may be mandatory (an order to act), or prohibitory (an order to desist from an act). Other equitable remedies are restitution and specific performance. 

Business Torts and Business Litigation

Parties in a business tort may explore other alternative dispute resolution methods like mediation or arbitration, especially when there is a contractual relationship between them. But, often, to protect your business and recover damages against those whose actions have caused your business harm, you may have to resort to business litigation, which takes place in the courts. 

Business arbitration or litigation can significantly impact your business. Your business needs to have an experienced business litigation law firm on your side to defend you from both internal and external threats to your business.

Why Business Tort Laws Matter and How They Protect Business Owners

Business tort law acknowledges that other people or businesses may intentionally or negligently perform actions that harm your business. It provides an avenue through which you can file a lawsuit and recover compensation for any loss your business experienced or will experience in the future because of those wrongful acts.

If your business has suffered from a breach of fiduciary duty, intentional interference in contracts and business relationships, fraud, or other types of business torts, your business is entitled to be compensated through the award of damages or equitable remedies. A business litigation law firm can help you file a business tort claim or lawsuit. 

The experienced business tort attorneys at King & Jones handle high-value business litigation cases in Chicago and nationwide. If your business has suffered losses because of a business tort, we can help you. Contact us today to get started.

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