Importance of Tort Law in Business Operations

2163 words (9 pages) Essay in Law

18/05/20 Law Reference this

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Introduction

 Tort under the jurisdiction of the common law can be described as a civil wrong that can cause a person to be suffering loss or injury which could be seen as resulting in legal liabilities towards the person committing the tort. The law of tort is seen to be dealing with the accountability of the people for causing damages by way of tortious act. The law of tort is often times seen to be overlapping with other areas of law like the criminal law, contract law or business law. Tort in business law is generally seen to be involving improper and intentional interference towards the interests in other people’s business. The business tort is the injury towards the interest in another person’s business. In this study a detailed analysis has been done in relation to the importance of the law of tort in business operations.

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Tort Law

 The term ‘tort’ is derived from the latin word ‘tortus’ which means wrong.  Torts under common law can be defined as civil wrongs that have been done by party to another (Goldberg, Sebok and Zipursky, 2016). A person would suffer for loss or injury by way of tort. The tort law can oftentimes be seen as overlapping with the other areas of law like the criminal law and business law (Zillman, Simmons and Gregory, 2015). A business tort can be defined as the intentional and improper interference towards a business. The main purpose of the law of tort is to be providing a way for holding responsible the people who cause harm. The primary intention of the tort law is for discouraging anyone from making the same mistakes and for avoiding the payment of fines for the tort judgments. The judgments in a tort case can be seen to be covering loss of wages, pain and suffering, medical bills and loss of earning capacity. Punishments for the corporations and other business entities for putting profit over safety in larger tort cases.

Purpose of Tort Law

 The main objective of the law of tort is the restoration of the injured parties to the conditions they had been before the injury had been inflicted upon them because of another person’s actions. The restoration of the condition of the injured party is done by way of awarding monetary damages for covering lost wages, medical expenses, compensation for anguish and mental pain (Tilley, 2016).

Business Tort

Business torts or economic torts can be described as the intentional, reckless or negligent wrongful acts that have been committed against business entities that would be resulting in financial losses. Business torts can be considered as an intentional injury towards the business interest of other people. The law of tort can be seen as important in business because it provides a way for the businesses for defending themselves against the financial loss stemming from anyone’s unlawful conduct which would be limiting the abilities of the business for operating as normal. A business can be affected by various types of torts (Bernaz, 2016). Businesses that had been injured financially through any intentional or negligent act of any other business can claim for monetary damages in the civil courts. There are various types of business torts which include civil conspiracy, fraudulent misrepresentation, breach of fiduciary duties and trade libel (Mann and Roberts, 2015).

The financial losses due to business torts are often seen to be based on the future projections as most of the business torts can be seen as involving damages towards business relationships, the ability to function in the marketplace in general, or public reputation. As an example, it can be seen that in any tortious claim the focus would often be on the actual losses that had been suffered by the contract’s interference. As the business tort can generally be defined as an unlawful act preventing the operations of any business, the lists of the specific torts in business can be seen to be relatively fluid. In business tort injuries can be ranging from loss of clients and opportunities in business to damage in reputation or even damage in the ability for staying in business. Some of the common torts in business are:

Restraint of Trade: Although the restraint of trade is considered as doctrine of common law and not as a specific tort, it can be seen to be referring to the claims in which even though the act of the defendant might not be causing immediate loss to the plaintiff but has caused a broader hindrance towards the ability for conducting the business normally. However some of the reasonable trade restraints can be seen as valid, like the non-compete clauses.

Fraudulent Misrepresentation: Entering in an agreement by two or more parties should be done in a good faith, whether it is contractual or has been sealed just with a handshake. A civil claim can be raised if one of the parties misrepresent their intentions or positions or any material aspect of the deal and it can be seen as to cause harm to the other party in a financial way.

Tortious Interference: Tortious interference would be seen as occurring when a party can be seen as interfering with a contract between two people in an intentional way that would result in loss of one or both the parties. In certain instances even in reply to a valid inquiry, something as nuanced as a silence or nodding of one’s head can be seen as construing as tortious interference.

Theft of Trade Secrets: The theft of the trade secrets can be seen as occurring at the time of unlawfully obtaining proprietary information of a business by one of the parties with an intention to gain competitive advantages in an unfair way.

Unfair Competition: Similar to the infringement in trademark and copyright, in unfair competition the defendant can be  seen as to be marketing any product that has been similar to the plaintiff’s product in a  confusing way. These types of claims might also be involving some form of false advertising.

Disparagement: Disparagement can be seen as occurring in such circumstances where a party is seen to be making false statements in regard to the quality of goods or products, which would cause the loss of business for the plaintiff. Disparagement can be seen to involve many different types of claims, such as trade libel and slander of title. False or fake negative reviews of a product may also be seen to be constituting disparagement.

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Computer Torts: The damages towards the computer have been recognized by more and more jurisdictions each day for constituting to be business tort. As an example it can be seen that intentional damage to the software or hardware of any computer can be considered as a business tort if it can be seen as negatively affecting the ability of the business for securing profits.  Negligent use of a computer can also be seen to be considered a tort in some jurisdictions.

Remedies

 The calculation and collection of the losses acquired because of business torts are most often seen as quite difficult task. Remedies for the torts of business are usually seen as involving some form award of monetary damages for the plaintiff (Tran, 2016). The defendant is required to be reimbursing the plaintiff for any of the losses that had been caused because their tortious conduct. One very important aspect that can be said as true for all torts is that the damages are required to be “calculable with reasonable certainty.” The meaning for that is the plaintiff should be able to be translating their economic losses into a numeric figure that can be specific. This is often seen to be difficult for calculating, since it is generally very hard to make calculation of what “loss of business reputation” or loss of clientele could be meaning in numbers. An example for it can be seen as follows, if a business tort can be seen as the plaintiff to be losing clients, they are required to be able to prove not only the loss of clients, but they also would be required to be proving what that loss would mean in terms of monetary value. They would be required to be showing exactly how much profit or income they would be losing because of the loss of clients.

Another common remedy for the business tort is for the court to be issuing an injunction by ordering the defendant for ceasing their tortious conduct. As an example, the proper remedy might be requiring the defendant for removing all false ads and any disparaging statements about the product of the plaintiff. An injunction can be described as an order of the court to restrain any party from conducting any action that could be threatening the legal rights of another party or could even compel a party for conducting any action, like making any restitution (Stickley, 2016).

In the law of tort in business two types of liabilities are present. These two types of liabilities are personal liability and vicarious liability.

Personal Liability: In case of law of tort of business it can be seen that an employer has the duty to be taking reasonable care for ensuring the safety of their employees. The duty can be seen as non delegable and personal.

Vicarious Liability:  Vicarious liability can be described as the liability of an employer for an act or omission by their employees during the ‘scope and course’ of their employment. Principals can also be held to be vicariously liable for any acts or omissions of their agents (Bell, 2013).               For the determination of whether an employer or a principal could be held vicariously liable for any tort, the courts would be considering the degree of control the employer or principal was seen to be having over the individual, and whether the individual could be considered as ‘part and parcel of the organization’ that is being run by the employer and if there had been a sufficient relationship between the individual and the employer for the individual to be considered as an employee.

Limitation Period: The limitation period to be bringing an action in tort law can be seen as six years from the date in which the cause of action was seen to be arising.

Conclusion

 In this study a detailed analysis has been done about the law of tort in business. Discussions have been made about the purpose of tort, various types of torts conducted in the business and the remedies that are available. Tort under the jurisdiction of the common law is described as a civil wrong that would cause a person to be suffering loss or injury which is seen as resulting in legal liabilities towards the person who has committed the tort. The law of tort deals with the accountability of the people for causing damages by way of tortious act. The law of tort is often times seen to be overlapping with other areas of law like the criminal law, contract law or business law. Business torts is considered as an intentional injury towards the business interest of other people. The law of tort is important in business because it provides a way for the businesses for defending themselves against the financial loss stemming from anyone’s unlawful conduct which would be limiting the abilities of the business for operating as normal. There are various types of business torts which include civil conspiracy, fraudulent misrepresentation, breach of fiduciary duties and trade libel.

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