Economic torts
Encyclopedia
Economic torts are tort
s that provide the common law
rules on liability for the infliction of pure economic loss
, such as interference with economic or business relationships.
Economic torts protect people from interference with their trade or business. The area includes the doctrine of restraint of trade
and has largely been submerged in the twentieth century by statutory interventions on collective labour law
, modern antitrust
or competition law
, and certain laws governing intellectual property
, particularly unfair competition
law. The "absence of any unifying principle drawing together the different heads of economic tort liability has often been remarked upon."
The principal torts can be listed as passing off
, injurious falsehood and trade libel (see also Food libel laws
), conspiracy
, inducement of breach of contract
, tortious interference
(such as interference with economic relations or unlawful interference with trade), and watching and besetting. These torts represent the common law's historical attempt to balance the need to protect claimants against those who inflict economic harm and the wider need to allow effective, even aggressive, competition (including competition between employers and their workers).
Two cases demonstrated economic tort's affinity to competition and labour law. In Mogul Steamship Co Ltd the plaintiffs argued they had been driven from the Chinese tea market by a 'shipping conference', that had acted together to underprice them. But this cartel
was ruled lawful and "nothing more [than] a war of competition waged in the interest of their own trade." Nowadays, this would be considered a criminal cartel.
In English labour law
the most notable case is Taff Vale Railway v. Amalgamated Society of Railway Servants. The House of Lords
thought that unions should be liable in tort for helping workers to go on strike for better pay and conditions. But it riled workers so much that it led to the creation of the British Labour Party and the Trade Disputes Act 1906
Further torts used against unions include conspiracy, interference with a commercial contract or intimidation.
.
Tort
A tort, in common law jurisdictions, is a wrong that involves a breach of a civil duty owed to someone else. It is differentiated from a crime, which involves a breach of a duty owed to society in general...
s that provide the common law
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
rules on liability for the infliction of pure economic loss
Pure economic loss
Economic loss refers to financial loss and damage suffered by a person such as can be seen only on a balance sheet rather than as physical injury to the person or destruction of property...
, such as interference with economic or business relationships.
Economic torts protect people from interference with their trade or business. The area includes the doctrine of restraint of trade
Restraint of trade
Restraint of trade is a common law doctrine relating to the enforceability of contractual restrictions on freedom to conduct business. In an old leading case of Mitchell v Reynolds Lord Smith LC said,...
and has largely been submerged in the twentieth century by statutory interventions on collective labour law
Labour law
Labour law is the body of laws, administrative rulings, and precedents which address the legal rights of, and restrictions on, working people and their organizations. As such, it mediates many aspects of the relationship between trade unions, employers and employees...
, modern antitrust
Antitrust
The United States antitrust law is a body of laws that prohibits anti-competitive behavior and unfair business practices. Antitrust laws are intended to encourage competition in the marketplace. These competition laws make illegal certain practices deemed to hurt businesses or consumers or both,...
or competition law
Competition law
Competition law, known in the United States as antitrust law, is law that promotes or maintains market competition by regulating anti-competitive conduct by companies....
, and certain laws governing intellectual property
Intellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
, particularly unfair competition
Unfair competition
Unfair competition in a sense means that the competitors compete on unequal terms, because favourable or disadvantageous conditions are applied to some competitors but not to others; or that the actions of some competitors actively harm the position of others with respect to their ability to...
law. The "absence of any unifying principle drawing together the different heads of economic tort liability has often been remarked upon."
The principal torts can be listed as passing off
Passing off
Passing off is a common law tort which can be used to enforce unregistered trademark rights. The tort of passing off protects the goodwill of a trader from a misrepresentation that causes damage to goodwill....
, injurious falsehood and trade libel (see also Food libel laws
Food libel laws
Food libel laws, also known as food disparagement laws and informally as veggie libel laws, are laws passed in 13 U.S. states that make it easier for food producers to sue their critics for libel. These 13 states include Alabama, Arizona, Colorado, Florida, Georgia, Idaho, Louisiana, Mississippi,...
), conspiracy
Conspiracy (civil)
A civil conspiracy or collusion is an agreement between two or more parties to deprive a third party of legal rights or deceive a third party to obtain an illegal objective....
, inducement of breach of contract
Breach of contract
Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance....
, tortious interference
Tortious interference
Tortious interference, also known as intentional interference with contractual relations, in the common law of tort, occurs when a person intentionally damages the plaintiff's contractual or other business relationships...
(such as interference with economic relations or unlawful interference with trade), and watching and besetting. These torts represent the common law's historical attempt to balance the need to protect claimants against those who inflict economic harm and the wider need to allow effective, even aggressive, competition (including competition between employers and their workers).
Two cases demonstrated economic tort's affinity to competition and labour law. In Mogul Steamship Co Ltd the plaintiffs argued they had been driven from the Chinese tea market by a 'shipping conference', that had acted together to underprice them. But this cartel
Cartel
A cartel is a formal agreement among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production. Cartels usually occur in an oligopolistic industry, where there is a small number of sellers and usually involve homogeneous products...
was ruled lawful and "nothing more [than] a war of competition waged in the interest of their own trade." Nowadays, this would be considered a criminal cartel.
In English labour law
Labour law
Labour law is the body of laws, administrative rulings, and precedents which address the legal rights of, and restrictions on, working people and their organizations. As such, it mediates many aspects of the relationship between trade unions, employers and employees...
the most notable case is Taff Vale Railway v. Amalgamated Society of Railway Servants. The House of Lords
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....
thought that unions should be liable in tort for helping workers to go on strike for better pay and conditions. But it riled workers so much that it led to the creation of the British Labour Party and the Trade Disputes Act 1906
Trade Disputes Act 1906
The Trade Disputes Act 1906 was an Act of the Parliament of the United Kingdom passed under the Liberal government of Sir Henry Campbell-Bannerman...
Further torts used against unions include conspiracy, interference with a commercial contract or intimidation.
Recent developments
Several of the economic torts in English law, in particular inducing breach of contract and "tortious interference" (otherwise known as causing loss by unlawful means), have been reviewed and clarified by the House of Lords in the 2007 case of OBG Ltd v AllanOBG Ltd v Allan
OBG Ltd v Allan [2007] was a combined appeal with Douglas v Hello! Ltd and Mainstream Properties Ltd v Young and stands as the leading case on economic torts in English law.-Facts:Lord Hoffmann in his judgment summarised the facts.-Judgment:...
.