Intentional torts: business torts Flashcards
Intentional misrepresentation
Intentional misrepresentation is:
(1) False representation about a material fact, whether deceptive, misleading, or concealment;
(2) Scienter—i.e., defendant knows that the representation is false or acted with reckless disregard for its falsehood;
(3) Intent to induce the plaintiff to act in reliance on the misrepresentation;
(4) Causation—i.e., the misrepresentation caused plaintiff to act or refrain from acting
(5) Justifiable reliance—that the facts were not obviously false or that it was unclear whether defendant was stating an opinion;
(6) Damages: actual economic/pecuniary loss.
A plaintiff bringing a tort for intentional misrepresentation is not required to investigate the truth of a defendant’s statements.
Duty to disclose
Generally, there is no duty to disclose unless:
(1) There is a fiduciary relationship;
(2) The other party is likely to be misled by statements the defendant made earlier; or
(3) The defendant is aware that:
(a) the other party is mistaken about the basic facts about the transaction; and
(b) custom suggests that disclosure should be made.
Negligent misrepresentation
Negligent misrepresentation is when:
(1) The defendant provided false information to the plaintiff;
(2) As a result of defendant’s negligence in preparing the information;
(3) During the course of a business or profession;
(4) Causing justifiable reliance; and
(5) The plaintiff is either:
(a) In a contractual relationship with the defendant; or
(b) A third party known by the defendant to be a member of the limited group for whose benefit the information is supplied.
A plaintiff can seek reliance (out of pocket) and consequential damages if the negligent representation is proven with sufficient certainty.
Intentional interference with a contract
Intentional interference with a contract is when:
(1) A valid contract, not terminable at will, existed between the plaintiff and a third party;
(2) The defendant knew of the contractual relationship; and
(3) The defendant:
(a) intentionally interfered with the contract, resulting in a breach;
(b) prevented or substantially burdened a party’s performance under its contractual obligations; or
(c) exceeded the bounds of fair competition and free expression; and
(4) the breach caused damages to the plaintiff.
Interference with a prospective economic advantage
Interference with a prospective economic advantage requires:
(1) [The elements of intentional interference with a contract, minus the contract, plus a wrongfulness requirement]; and
(2) The defendant intentionally interferes with a prospective business relationship or benefit between the plaintiff and a third party.
Misappropriation of trade secrets
Misappropriation of trade secrets is when:
(1) The plaintiff owns information that is not generally known—i.e., a valid trade secret;
(2) The plaintiff has taken reasonable precautions to protect it; and
(3) The defendant acquires the secret by improper means.
Trade libel
Trade libel is:
- Publication
- Of a false or derogatory statement
- With malice
- Relating to the plaintiff’s title to her business, the quality of her business, or the quality of its products; and
- Causing special damages as a result of interference with or damage to business relationships.
Slander of title
Slander of title is:
- Publication
- Of a false statement
- Derogatory to the plaintiff’s title
- With malice
- Causing special damages, and
- Diminishing value in the eyes of third parties.
Intentional interference with a contract: factual considerations
Several considerations are relevant to an intentional interference with a contract claim:
- When the interference involves a prospective economic relationship, rather than an existing contractual relationship, the defendant has greater latitude in acting in its own interest;
- A competitor has greater latitude in acting in a manner that interferes with the business relationships of a competitor;
- A person is generally free to deal or to refuse to deal with another.
Negligent misrepresentation: liability to third parties
The defendant is not liable if the third party’s use of the information is of a different character than the use for which the defendant provided the information.
Intentional misrepresentation: recovery
Under the majority rule, the measure of recovery is the “benefit of the bargain”—i.e., the difference between actual value received and the value that would have been received if the misrepresentation had been true.
Intentional interference with a contract: defenses
The defendant cannot raise defenses to formation—e.g., the statute of frauds. Such defenses are only available to parties to the contract.
