Arthur R. Lehman, L.L.C.

A brief primer on business torts

When Manhattan business owners think about why they might sue or be sued, many immediately think of breach of contract. Indeed, much of the business law duties of courts revolve around alleged breaches of contract. Yet there are other possible bad actions that could result in litigation. This blog post will provide a brief discussion of a major category of business litigation: business torts.

Business torts are defined as wrongful acts that cause some kind of financial loss, either immediately or in the future, to a business entity. In many cases the allegedly wrongful act was intentional, in other cases it was not intentional but the result of negligence or recklessness. Note that the harmful act has to be considered wrongful in order to provide a basis to sue. Practices that are competitive in nature but not wrongful will not provide a basis to sue.

What wrongful acts could give rise to a business tort claim? One major one is restraint of trade, where the plaintiff alleges that the defendant committed a wrongful act that hindered the plaintiff from conducting business as it normally would without the hindrance. Another is tortious interference, where the plaintiff alleges that the defendant unlawfully interfered with the contract or business relationship of the plaintiff.

Fraudulent misrepresentation is another business tort. In fraudulent misrepresentation, the plaintiff alleges that the defendant falsely or recklessly misrepresented its position in a contract, causing injury to the plaintiff. Another business tort is theft of trade secrets. This is where the plaintiff alleges that the defendant stole the plaintiff's trade secret in a manner that harmed the plaintiff. There are some other wrongful acts that could constitute a business tort as well.

Source: FindLaw, "Business Torts," accessed on April 7, 2018

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