So what exactly is a “tort”? It is a harmful act, but in a civil context. An example of a tort is fraud. A person who lies to get you to enter into a business deal has committed fraud, a tort, and is sometimes called a “tortfeasor.” Torts are analogous to crimes, but the penalty for a tort is money damages, not jail time. Redress for a tort is obtained by filing a lawsuit, not by filing criminal charges with the District Attorney. It is possible for a harmful act to be both a tort and a crime; for example, a person who commits fraud in certain contexts may have criminal liability as well as civil liability.
Another type of tort is defamation, which is a generic term for libel and slander. An example of defamation in a business context is when your competitor’s salesman falsely tells one of your customers not to buy your product because it has been proven to be dangerous. If this were to cost you a significant sale, it could also constitute another tort, known as tortious interference with a contract or a prospective contract. Lest you be concerned about your own sales force’s activities, keep in mind that honest, even tough, competition is not a tort. Competition only becomes a tort when it crosses the line into dishonesty or a deliberate effort to harm someone.
Another type of business tort is unfair competition, an example of which is when a competitor intentionally uses a name or logo similar to yours to steal your customers. Theft of trade secrets is another common business tort. This may occur when an employee leaves your company and takes your proprietary information to a competitor. Both the former employee and the competitor may have liability for the theft. Trade secrets may be a process or technique that you have developed and that your competitors do not generally know, or a list of customers and their needs that you have developed and that cannot readily be recreated. Information about where to drill for oil or gas may also constitute a trade secret, and theft of that information may give rise to a compensable claim.
The area of business torts can be confusing, and can hardly be explained in a few short paragraphs. If you think that someone has harmed you or your business, call us. We can review all the facts with you and help you determine whether you have a claim that can and should be pursued.