Business Torts

Business Torts Quick Links

Fraudulent Misrepresentation

Interference with Contractual Relations

Unfair Competition

Business Tort Remedies

Why Hire Steve Crane Jr?

Types of Business Torts

Business torts, like business fraud, involve intentional deception or misrepresentation which results in economic harm to a business. Whereas business fraud results in harm done directly to a business, torts do harm to assets which are less tangible, such as to a business’ ability to form new contractual relationships or expected profits from the continuance of existing contractual relationships. The majority of business torts can fit into one of a few categories.

Fraudulent Misrepresentation

In order to file a fraud claim under fraudulent misrepresentation, the plaintiff needs to prove that the defendant intentionally provided false or misleading information. The plaintiff’s reliance on this misinformation must have resulted in harm to the plaintiff. An example of fraudulent misrepresentation would be a business including financial information which is false or misleading on an application for a loan. Since the bank relied on these financial statements when it decided to grant the loan, if the business then defaults on the loan, the bank will have a claim against the business for fraudulent misrepresentation. However, if the bank later discovers that the business provided false financial information, but the business does not default on the loan, then the bank will not be able to file a claim for fraudulent misrepresentation because the bank will not have suffered any material harm as a result of the fraud.

In addition to providing false information, the requirements for fraudulent misrepresentation can also be met by failing to disclose information. This might happen if a financial advisor, for example, representing both the seller and the buyer of a property, is aware that the property contains toxic chemicals and fails to disclose this information to the buyer. In this case, the financial advisor would then be liable for fraudulent misrepresentation to the buyer.

Interference with Contractual Relations

If a third party interferes with a contract between two other people or entities, and that interference results in harm to one of the parties, then the injured party may be able to sue for damages. In order to file a claim for interference with contractual relations, the plaintiff must be able to prove that five elements: (1) the existence of a valid and enforceable contract between the plaintiff and a third party; (2) the defendant’s awareness of the contractual relationship; (3) the defendant’s intentional and unjustified inducement of a breach of the contract; (4) a subsequent breach by the third party caused by the defendant’s wrongful conduct; and (5) damages resulting from the breach. Steve and his team can analyze whether the elements of this claim are met in a particular situation.

Unfair Competition

Unfair competition occurs when a person or business uses illegal or unfair means to get an advantage over their competitors. This can mean anything including lying or materially misrepresenting a product or service to customers, using illegal means to acquire materials at a lower rate and failing to pay employees at least the minimum wage or the proper overtime compensation in order to lower the business’ bottom line.

In addition to these main categories, people and businesses can commit other types of business torts, including trade secret misappropriation, breach of fiduciary relationships, misappropriation of business opportunities, and conspiracy.

Business Torts Remedies

Remedies available for claims for breach of fiduciary duty provide include:

• lost profits, as the natural and probable consequence of the breach;
• out-of-pocket losses, as the difference between the value paid and the value received;
• mental anguish damages, which must be separate from the consequence of economic losses and must be a foreseeable result, such as mental anguish from a breach by a physician to his patient; and
• exemplary damages to punish rather than compensate, which are generally imposed only when actual damages are awarded, and which may require a unanimous liability finding by the jury and unanimous agreement as to the amount.

Equitable relief also is available and includes:

• avoidance or rescission of a contract that is the basis of a breach of fiduciary duty claim (but note that rescission requires mutual restoration);
• profit disgorgement to obtain the defendants’ ill-gained profits resulting from breach;
• fee forfeiture (often confused with profit disgorgement) to protect fiduciary relationships by discouraging disloyalty through forfeiture of the fiduciary’s compensation;
• receivership;
• injunction;
• accounting;
• reformation; and
• constructive trust, which requires tracing of the property (including money) at issue.

Steve represents businesses and individuals in lawsuits involving a variety of areas, including complex business and commercial litigation, arbitration, real estate disputes, employment law, probate litigation, and criminal defense.

If you have a dispute involving a business tort, you should contact Steve. He and his team can assess the facts of your case and help you determine the best course of action to move forward.

To schedule a discrete and confidential consultation about your matter, email or call Steve at (248) 963-6300.