Economic torts by Sesa Gill at LexCliq

Economic torts are tortious interference actions designed to protect trade or business. The area includes the doctrine of restraint of trade. The principal torts are:

  • Passing off,
  • Conspiracy,
  • Deceit
  • Conversion

1.Passing Off

Passing off is a wrong, a common law tort which protects the goodwill of a trader from misrepresentation. Misleading the public into believing falsely, that the brand being projected was the same as a well known brand is a wrong and is known as the tort of “passing off”

“A man may not sell his own goods under the pretence that they are the goods of another man.”

Law aims to protect traders from this form of unfair competition.

Legally, classifying acts under this tort aims to protect the right of property that exists in goodwill. Goodwill is defined as the part of business value over and above the value of identifiable business assets. So basically it is an intangible asset

in a passing off action, the plaintiff must prove that there is a similarity in the trade names or marks and that the defendant is passing off his goods as those of the plaintiff’s. Remedies could include injunction or damages or both. Damage or likelihood of damage form the core all passing off actions.

Essentials of Passing Off

  • His goods were known to the public by some mark, distinctive name, appearance, get up,  or badge.
  • The defendant made a spoken or written representation by the conduct of others or by word of mouth.
  • The use or initiation of the name by the defendant misleads the public and made them believie that the goods by the defendant were of the plaintiff.
  • In the ordinary course of business, the defendant’s conduct is likely to mislead or deceive the public at least in case of unwary or incautious, if not the intelligent or careful purchaser.

2. Conspiracy (civil)

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. A conspiracy may also refer to a group of people who make an agreement to form a partnership in which each member becomes the agent or partner of every other member and engage in planning or agreeing to commit some act. It is not necessary that the conspirators be involved in all stages of planning or be aware of all details. Any voluntary agreement and some overt act by one conspirator in furtherance of the plan are the main elements necessary to prove a conspiracy. A conspiracy may exist whether legal means are used to accomplish illegal results, or illegal means used to accomplish something legal.

“Even when no crime is involved, a civil action for conspiracy may be brought by the persons who were damaged.”

In the law of tort, the legal elements necessary to establish a civil conspiracy are substantially the same as for establishing a criminal conspiracy, i.e. there is an agreement between two or more natural persons to break the law at some time in the future or to achieve a lawful aim by unlawful means. The criminal law often requires one of the conspirators to take an overt step to accomplish the illegal act to demonstrate the reality of their intention to break the law, whereas in a civil conspiracy, an overt act towards accomplishing the wrongful goal may not be required. Etymologically

3. Tort of deceit

The tort of deceit is a type of legal injury that occurs when a person intentionally and knowingly deceives another person into an action that damages them. Specifically, deceit requires that the tortfeasor

  • makes a factual representation,
  • knowing that it is false, or reckless or indifferent about its veracity,
  • intending that another person relies on it,
  • who then acts in reliance on it, to that person’s own detriment.

Deceit dates in its modern development from Pasley v. Freeman. Here the defendant said that a third party was creditworthy to the claimant, knowing he was broke. The claimant loaned the third party money and lost it. He sued the defendant successfully.

4.Conversion

Conversion is an intentional tort consisting of “taking with the intent of exercising over the chattel an ownership inconsistent with the real owner’s right of possession”. In England & Wales, it is a tort of strict liability.[2] Its equivalents in criminal law include larceny or theft and criminal conversion. In those jurisdictions that recognise it, criminal conversion is a lesser crime than theft/larceny.

Examples of conversion include: 1) Alpha cuts down and hauls away trees on land s/he knows is owned by Beta, without permission or privilege to do so; and 2) Gamma takes furniture belonging to Delta and puts it into storage, without Delta’s consent (and especially if Delta does not know where Gamma put it)

Elements of Conversion

Conversion is a tort that exposes you to liability for damages in a civil lawsuit. It applies when someone intentionally interferes with personal property belonging to another person. To make out a conversion claim, a plaintiff must establish four elements:

First, that the plaintiff owns or has the right to possess the personal property in question at the time of the interference;

Second, that the defendant intentionally interfered with the plaintiff’s personal property (sometimes also described as exercising “dominion and control” over it);

Third, that the interference deprived the plaintiff of possession or use of the personal property in question; and

Fourth, that the interference caused damages to the plaintiff.

Taking the goods without any right 

Taking the goods on which a person has no rights can be termed as conversion. For instance, if an individual lopped branches of the fruit trees overhanging his land and consumed the fruit, then he can be held liable to the owner for its value as he would be held guilty of conversion as he had the right to lop the branches but it did not allow with it the right to pick and consume the fruit.

Conversion by Parting with Goods

If any individual who is entrusted with the goods of another, put them into the hands of a third person contrary to orders, it will be termed as a conversion. The wrongful act is done when he aims at giving the third person rights over the property itself and not merely the possession. Any individual who without lawful justification deprives a person of his goods by delivering them to someone else so as to change the possession is guilty of conversion.

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