Are you looking into business torts in Canada? Torts are civil wrongs. Business torts, more specifically, are civil wrongs causing damage to economic interests. A business tort must result in an actual loss to the party bringing the action, who is known as the “plaintiff”.

For business torts, the amount of damages awarded to the plaintiff is generally equal to the amount of money required to return the plaintiff to their position before the wrong took place.

However, damages in intentional business torts are often “at large,” meaning they cannot be easily quantified since they include compensation for non-material losses.

These losses, such as loss of reputation or injured feelings, are assessed by considering all the relevant circumstances.

This article will discuss some common business torts, including breach of contract, negligent misrepresentation, conspiracy, intimidation, unlawful interference with economic relations, and abuse of process.

Business Torts in Canada and Breach of Contract

Breach of contract occurs when one party to a contract fails to perform the duties required under the contract.

An example of a breach of contract is when a tenant signs a lease agreement but refuses to pay the rent.

To establish a breach of contract, the plaintiff must prove

1. There was a valid contract, and

2. the defendant breached the contract.

For a contract to be valid, it must include an offer, acceptance, consensus, certainty of terms, and consideration.

If the plaintiff proves a breach of contract, they may be entitled to the express remedies listed in the contract, damages, or equitable remedies such as specific performance. Specific performance is where the court orders a party to perform its obligation under a contract.

Business Torts in Canada and Negligent Misrepresentation

The tort of negligent misrepresentation occurs when a plaintiff suffers a loss because it relied on the defendant’s unintentional false representation.

An example of negligent misrepresentation is when a house seller tells a potential purchaser that the roof is in good condition without investigating whether that is true.

If the potential purchaser relies on that representation to buy the house, the seller may be liable for negligent misrepresentation if the roof collapses shortly after the sale.

To establish negligent misrepresentation, the plaintiff must prove

1. A representation was made by the defendant;

2. The defendant owed the plaintiff a duty of care based on a special relationship;

3. The representation was false or misleading;

4. The defendant was negligent in making the representation;

5. The plaintiff reasonably relied on the representation and

6. The plaintiff suffered a loss as a result.

The misrepresentation may be either written or oral. In some cases, even omissions or misrepresentations by implication may be sufficient.

The plaintiff must prove that their reliance on the misrepresentation resulted in actual loss. Further, the plaintiff must show that “but for” the defendant’s negligent misrepresentation, the loss would not have occurred.

If the plaintiff successfully proves negligent misrepresentation, it may receive damages, or if the misrepresentation induced the plaintiff to enter into a contract, the contract may be rescinded.

Define Business Torts and Conspiracy

The tort of conspiracy occurs when two or more persons form and carry out an agreement to injure a third party.

For example, Corporation A and Corporation B would be liable for conspiracy in the following situation. Corporation A is a supplier of materials used by Corporation B and Corporation C to manufacture competing products.’

Then, corporation C contracts with Corporation A to obtain materials.

Corporation B then agrees with Corporation A to pay a higher price for its materials if it refuses to honour its contract with Corporation C. As a result, Corporation C cannot manufacture its products and fill its orders.

There are two distinct types of conspiracy:

(1) predominant purpose conspiracy;

(2) unlawful means conspiracy.

Predominant purpose conspiracy

1. There is an agreement by two or more defendants to pursue a course of action;

2. The predominant purpose of the defendant’s conduct is to cause injury to the plaintiff; and

3. The plaintiff suffers injury.

Unlawful means conspiracy

1. There is an agreement by two or more defendants to pursue a course of action;

2. The conduct in question is itself unlawful;

3. The conduct is directed at the plaintiff;

4. The defendants know, or ought to know, that damage would likely result; and

5. The plaintiff suffers injury.

Both types of conspiracy require an agreement by two or more defendants to pursue a course of action. This agreement must only be a joint plan, not a formal contract. An agreement can be proven either by direct evidence or inference.

If a plaintiff proves that it suffered a loss due to a conspiracy, it may be entitled to damages or an injunction.

Business Torts in Canada and Intimidation

The tort of intimidation occurs when the defendant threatens to commit an unlawful act and, in doing so, causes the plaintiff loss. An example of intimidation is when a company contracts with a supplier to obtain the materials required to manufacture its products.

After entering into the contract, the supplier, knowing that the company cannot obtain the materials elsewhere and knowing it has orders to fill, advises the company that if they do not pay more than the agreed-upon price for the materials, the supplier will not fulfill the terms of the contract.

Two-party intimidation occurs when the plaintiff is threatened directly and suffers a loss. Three-party intimidation occurs when a third party is threatened, and the plaintiff suffers a loss as a result.

The tests for two-party and three-party intimidation are the same

1. Coercion of another person to do or refrain from doing an act;

2. The use of a threat as a means of compulsion;

3. The threat was to use unlawful means;

4. The person threatened to comply with the demand;

5. Intention to injure the plaintiff; and

6. The plaintiff suffered damages as a result of the threat.

If a plaintiff proves that it suffered a loss due to intimidation, it may be entitled to damages or an injunction.

Unlawful Interference With Economic Relations

The tort of unlawful interference with economic relations occurs when the defendant intentionally interferes with a plaintiff’s financial interests by committing an illegal act against a third party.

An example of unlawful interference with economic relations is when two business partners jointly own a building that one partner wants to sell and the other does not.

The unwilling partner blocks physical access to the building and files baseless certificates of pending litigation against the title to prevent the sale. These delays deter willing purchasers, and when the building is eventually sold, it will be offered at a lower price than the original offers.

To establish the tort of unlawful interference with economic relations, the plaintiff must show:

1. The defendant intended to injure the plaintiff’s economic interests;

2. The defendant interfered with the actions of a third party in which the plaintiff had an economic interest;

3. The interference was by illegal or unlawful means; and

4. The plaintiff suffered economic loss or harm as a result.

The defendant must have intended to injure the plaintiff; mere reckless or negligent interference is insufficient. However, the primary purpose of the defendant’s actions need not be to harm the plaintiff; it must only be one of the defendant’s purposes.

The “unlawful means” by which the interference took place will only be considered unlawful if it is actionable by the third party, not only by the plaintiff.

If a plaintiff proves that it suffered a loss due to unlawful interference with economic relations, it may be entitled to damages or an injunction.

Abuse of Process and Business Torts in Canada

The tort of abuse of process occurs when someone misuses the court’s process to coerce another person to do something entirely outside the scope of the legal claim.

An example of abuse of process is when an individual registers a certificate of pending litigation on the title of a property to tie it up and prevent it from being sold to anyone else as a negotiation tactic regarding an unrelated agreement.

To establish the tort of abuse of process, the plaintiff must demonstrate that

1. It has been subjected to a legal process by the defendant;

2. There was collateral or improper purpose in bringing the action;

3. A definitive act or threat was made in furtherance of the collateral or improper purpose; and

4. Some measure of special damage resulted.

A wrong or vindictive motive on the defendant’s part is not sufficient; there must be collateral or improper purpose entirely separate from the intended purpose of the legal proceeding, such as blackmail or extortion.

If a plaintiff proves that it was injured due to abuse of process, they may be entitled to damages or an injunction.

Understanding Business Torts in Canada

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