Business torts, which are also called economic torts, occur when a person or entity does something that causes financial harm to a business. These actions do not have to be intentional; they can also be the result of negligence or reckless actions.
Although not all business torts are criminal, some may result in criminal charges. This is what you should know about business torts.
To receive the consideration of a tort, the action needs to have caused some kind of loss for the business. The company may have lost reputation, market share, competitive advantage or profits. However, they typically cause financial loss even if the initial damage is to another aspect of the business, such as its reputation.
Common business torts
A third party cannot intentionally damage the relationship between the company and a second party, such as a vendor or customer, such as contract interruptions, which are intentional interference claims. If a company relies on a statement or action that the contributing party knows is incorrect, false or wrong, and the business experiences harm, the second party could face fraud charges as well as a civil suit that claims fraudulent actions caused the loss.
A fiduciary, someone who has the responsibility to act in the best interests of another party, can also breach his or her duty. For example, a board of directors could make decisions that harm the shareholders, known as beneficiaries.
Businesses that file civil cases for these types of economic torts can receive legal remedies that cover their losses as well as punitive damages that further compensate for especially damaging actions. They may also receive equitable remedies, such as injunctions.
Business tort law allows companies that receive harm due to the actions of another entity to recover compensation for the harm.