Nature of economic torts
Economic torts are tortious interference actions designed to protect trade or business. The area includes the doctrine of restraint of trade and, particularly in the United Kingdom, has largely been submerged in the twentieth century by statutory interventions on collective labour law and modern 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." [1]
The principal torts are:
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 demonstrate economic torts' affinity to competition and labour law. In Mogul Steamship Co Ltd [2] 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." [3] 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. [4] 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, [5] interference with a commercial contract [6] or intimidation. [7]
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 OBG Ltd v Allan [8] the majority adopted a restrictive view of the unlawful means tort, where the plaintiff has a claim only where the wrong to the third party would have been actionable at the instance of that third party, and he must have an economic interest at stake in the interference by the defendant with that third party.
- In Total Network SL v Revenue and Customs, [9] the House of Lords distinguished the conspiracy tort from the unlawful means tort and held that a more flexible definition of “unlawful means” was needed in the conspiracy context.
In 2014, the Supreme Court of Canada, favouring the ruling in OBG, standardized Canadian jurisprudence with respect to the "tort of unlawful interference with economic relations" (which it preferred to call "causing loss by unlawful means", or the "unlawful means tort"). In its ruling in A.I. Enterprises Ltd. v. Bram Enterprises Ltd. , [10] it declared:
- Liability to the plaintiff is based on (or parasitic upon) the defendant’s unlawful act against the third party. The two core components of the unlawful means tort are that the defendant must use unlawful means and that the defendant must intend to harm the plaintiff through the use of the unlawful means.
- In order for conduct to constitute “unlawful means” for this tort, the conduct must give rise to a civil cause of action by the third party or would do so if the third party had suffered loss as a result of that conduct. The unlawful means tort should be kept within narrow bounds, and it is not subject to principled exceptions.
- The defendant must have the intention to cause economic harm to the plaintiff as an end in itself or the intention to cause economic harm to the plaintiff because it is a necessary means of achieving an end that serves some ulterior motive.
- The focus of this tort is unlawful conduct that intentionally harms the plaintiff’s economic interests. There need be no contract or even other formal dealings between the plaintiff and the third party so long as the defendant’s conduct is unlawful and it intentionally harms the plaintiff’s economic interests.
- The tort of unlawful means is available even if there is another cause of action available to the plaintiff against the defendant in relation to the alleged misconduct.
In Indian jurisprudence, economic torts have found varying degrees of acceptance. While Indian courts have been reluctant to award damages for the economic torts of simple and unlawful conspiracy as well as inducing breach of contract [11] due to the confused state of the law, [12] damages are regularly awarded for torts affecting economic interests under the conspiracy to injure and courts have referred to English precedent on the matter. [13] The courts have been more willing to adopt English precedent in areas such as the tort of deceit, [14] unlawful interference with trade, [15] intimidation, [16] and malicious falsehood [17] which constitute an intentional attempt to undermine the interests of a specific party.
At common law, damages are a remedy in the form of a monetary award to be paid to a claimant as compensation for loss or injury. To warrant the award, the claimant must show that a breach of duty has caused foreseeable loss. To be recognised at law, the loss must involve damage to property, or mental or physical injury; pure economic loss is rarely recognised for the award of damages.
Negligence is a failure to exercise appropriate and/or ethical ruled care expected to be exercised amongst specified circumstances. The area of tort law known as negligence involves harm caused by failing to act as a form of carelessness possibly with extenuating circumstances. The core concept of negligence is that people should exercise reasonable care in their actions, by taking account of the potential harm that they might foreseeably cause to other people or property.
A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishable by the state. While criminal law aims to punish individuals who commit crimes, tort law aims to compensate individuals who suffer harm as a result of the actions of others. Some wrongful acts, such as assault and battery, can result in both a civil lawsuit and a criminal prosecution in countries where the civil and criminal legal systems are separate. Tort law may also be contrasted with contract law, which provides civil remedies after breach of a duty that arises from a contract. Obligations in both tort and criminal law are more fundamental and are imposed regardless of whether the parties have a contract.
In jurisprudence, duress or coercion refers to a situation whereby a person performs an act as a result of violence, threat, or other pressure against the person. Black's Law Dictionary defines duress as "any unlawful threat or coercion used... to induce another to act [or not act] in a manner [they] otherwise would not [or would]". Duress is pressure exerted upon a person to coerce that person to perform an act they ordinarily would not perform. The notion of duress must be distinguished both from undue influence in the civil law. In criminal law, duress and necessity are different defenses.
English tort law concerns the compensation for harm to people's rights to health and safety, a clean environment, property, their economic interests, or their reputations. A "tort" is a wrong in civil, rather than criminal law, that usually requires a payment of money to make up for damage that is caused. Alongside contracts and unjust enrichment, tort law is usually seen as forming one of the three main pillars of the law of obligations.
Tortious interference, also known as intentional interference with contractual relations, in the common law of torts, occurs when one person intentionally damages someone else's contractual or business relationships with a third party, causing economic harm. As an example, someone could use blackmail to induce a contractor into breaking a contract; they could threaten a supplier to prevent them from supplying goods or services to another party; or they could obstruct someone's ability to honor a contract with a client by deliberately refusing to deliver necessary goods.
Ex turpi causa non oritur actio is a legal doctrine which states that a plaintiff will be unable to pursue legal relief and damages if it arises in connection with their own tortious act. Particularly relevant in the law of contract, tort and trusts, ex turpi causa is also known as the illegality defence, since a defendant may plead that even though, for instance, he broke a contract, conducted himself negligently or broke an equitable duty, nevertheless a claimant by reason of his own illegality cannot sue. The UK Supreme Court provided a thorough reconsideration of the doctrine in 2016 in Patel v Mirza.
Canadian tort law is composed of two parallel systems: a common law framework outside Québec and a civil law framework within Québec. Outside Québec, Canadian tort law originally derives from that of England and Wales but has developed distinctly since Canadian Confederation in 1867 and has been influenced by jurisprudence in other common law jurisdictions. Meanwhile, while private law as a whole in Québec was originally derived from that which existed in France at the time of Québec's annexation into the British Empire, it was overhauled and codified first in the Civil Code of Lower Canada and later in the current Civil Code of Quebec, which codifies most elements of tort law as part of its provisions on the broader law of obligations. As most aspects of tort law in Canada are the subject of provincial jurisdiction under the Canadian Constitution, tort law varies even between the country's common law provinces and territories.
In English tort law, an individual may owe a duty of care to another, to ensure that they do not suffer any unreasonable harm or loss. If such a duty is found to be breached, a legal liability is imposed upon the tortfeasor to compensate the victim for any losses they incur. The idea of individuals owing strangers a duty of care – where beforehand such duties were only found from contractual arrangements – developed at common law, throughout the 20th century. The doctrine was significantly developed in the case of Donoghue v Stevenson, where a woman succeeded in establishing a manufacturer of ginger beer owed her a duty of care, where it had been negligently produced. Following this, the duty concept has expanded into a coherent judicial test, which must be satisfied in order to claim in negligence.
Allen v Flood [1898] AC 1 is a leading case in English tort law and UK labour law on intentionally inflicted economic loss.
Rookes v Barnard [1964] AC 1129 is a UK labour law and English tort law case and the leading case in English law on punitive damages and was a turning point in judicial activism against trade unions.
Torquay Hotel Co Ltd v Cousins [1968] EWCA Civ 2 (BAILII) is a UK labour law case concerning the liability of a union when its members take industrial action.
Quinn v Leathem [1901] UKHL 2, is a case on economic tort and is an important case historically for British labour law. It concerns the tort of "conspiracy to injure". The case was a significant departure from previous practices, and was reversed by the Trade Disputes Act 1906. However, the issue of secondary action was later restricted from the Employment Act 1980, and now the Trade Union and Labour Relations (Consolidation) Act 1992. The case was heavily controversial at the time, and generated a large amount of academic discussion, notably by Wesley Newcomb Hohfeld, which continued long after it was overturned.
The following outline is provided as an overview of and introduction to tort law in common law jurisdictions:
Parsons (Livestock) Ltd v Uttley Ingham & Co Ltd [1978] QB 791 is an English contract law case, concerning remoteness of damage. In it, the majority held that losses for breach of contract are recoverable if the type or kind of loss is a likely result of the breach of contract. Lord Denning MR, dissenting on the reasoning, held that a distinction should be drawn between losses for physical damage and economic losses.
Economic torts in English law refer to a species of civil wrong which protects the economic wealth that a person will gain in the ordinary course of business. Proving compensation for pure economic loss, examples of an economic tort include interference with economic or business relationships.
OBG Ltd v Allan[2007] UKHL 21 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.
Mogul Steamship Co Ltd v McGregor, Gow & Co [1892] AC 25 is an English tort law case concerning the economic tort of conspiracy to injure. A product of its time, the courts adhered to a laissez faire doctrine allowing firms to form a cartel, which would now be seen as contrary to the Competition Act 1998.
Tort law in India is primarily governed by judicial precedent as in other common law jurisdictions, supplemented by statutes governing damages, civil procedure, and codifying common law torts. As in other common law jurisdictions, a tort is breach of a non-contractual duty which has caused damage to the plaintiff giving rise to a civil cause of action and for which remedy is available. If a remedy does not exist, a tort has not been committed since the rationale of tort law is to provide a remedy to the person who has been wronged.
AI Enterprises Ltd v Bram Enterprises Ltd, 2014 SCC 12 was a unanimous decision of the Supreme Court of Canada that standardized Canadian jurisprudence with respect to the economic tort of unlawful means.
