Business torts are not committed against persons or property; rather, the harm done is to intangible assets, such as economic interests or business relationships. Generally, there are three common “business torts”: 1) Interference with contractual relations, 2) Interference with prospective business advantage or the tort of “unfair competition”, and 3) Fraudulent misrepresentation.
Interference with Contractual Relations
In business, competition is fierce. However, there are certain things that cross the line between legitimate, competitive, conduct and a civil wrong. For example, business’ and their agents may not intentionally and maliciously interfere with existing contractual relations between a business and its customers; such conduct is a tort known as “interference with contractual relations”.
In Nevada, in order to establish intentional interference with contractual relations, a plaintiff must show: (1) a valid and existing contract; (2) the defendant’s knowledge of the contract; (3) intentional acts intended or designed to disrupt the contractual relationship; (4) actual disruption of the contract; and (5) resulting damage.
In the absence of a contract, a plaintiff may still establish the tort of intentional interference with prospective economic advantage by showing: (1) a prospective contractual relationship between the plaintiff and a third party; (2) knowledge by the defendant of the prospective relationship; (3) intent to harm the plaintiff by preventing the relationship; (4) the absence of privilege or justification by the defendant; and (5) actual harm to the plaintiff.
To be considered tortious, a defendant’s actions must substantially exceed fair competition and free expression, such as persuading a bank not to lend a competitor any more money.
Interference with Prospective Business Advantage
Similarly, a business or its agents may be held liable if they unfairly interfere with another business’ effort to attract clients: such conduct is commonly referred to as “unfair competition” and may also be proscribed by statute. In Nevada, the elements of the tort of intentional interference with a prospective economic advantage are: (1) a prospective contractual relationship between the plaintiff and a third party; (2) the defendant’s knowledge of this prospective relationship; (3) the intent to harm the plaintiff by preventing the relationship; (4) the absence of privilege or justification by the defendant; and, (5) actual harm to the plaintiff as a result of defendant’s conduct.
Also, in Nevada the prospective relationship need not be a formal contractual relationship, but it must be something presently expected and of pecuniary value to the plaintiff. Furthermore, as to the intent element, the plaintiff must show that the