Financial loss is an inherent risk to any business. Market conditions can change, competition can become fiercer and customers may disappear. These are all possibilities that any firm faces when wading into the waters of the free market. On the other hand, when financial loss is caused because of the actions or inaction of another business, individual or group of individuals, it is not something that a firm would normally expect to encounter as a part of its day-to-day operations.
When a firm or an individual causes another business to suffer financial injury, this might be a business tort. Business torts are usually intentional acts, such as fraud or theft of trade secrets. But, they can also arise from negligent or reckless acts or inaction. For example, if a former employee uses information that he learned in his previous position at his new company, but does not realize that the information was protected as a trade secret, he has committed a negligent or reckless – as opposed to intentional – business tort.
Generally, if a business tort can be proven, the injured company can seek redress through a lawsuit in civil court. A company can seek damages for the amount of financial loss it suffered. In the case of certain types of torts, the law may require a wrongdoer to pay additional damages as a form of punishment and cover attorneys’ fees.
For the most part, business torts are a matter of civil law. However, in some instances, they may also rise to the level of a criminal offense. Certain types of fraud and restraint of trade can result in a business or individual being charged criminally in addition to being subjected to civil liability.