Economic torts in English law
Encyclopedia
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.
and has largely been submerged in the twentieth century by statutory interventions on collective labour law
, modern antitrust
or 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."
The principal torts can be listed as passing off
, injurious falsehood and trade libel (see also Food libel laws
), conspiracy
, inducement of breach of contract
, tortious interference
(such as interference with economic relations or unlawful interference with trade), and watching and besetting. 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 demonstrated economic tort's affinity to competition and labour law. In Mogul Steamship Co Ltd v McGregor, Gow & Co
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." Nowadays, this would be considered a criminal cartel.
the most notable case is Taff Vale Railway v Amalgamated Society of Railway Servants. 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, interference with a commercial contract or intimidation.
LegalDay Economic Torts
Pure economic loss
Economic loss refers to financial loss and damage suffered by a person such as can be seen only on a balance sheet rather than as physical injury to the person or destruction of property...
, examples of an economic tort include interference with economic or business relationships.
Overview
Economic torts protect people from interference with their trade or business. The area includes the doctrine of restraint of tradeRestraint of trade
Restraint of trade is a common law doctrine relating to the enforceability of contractual restrictions on freedom to conduct business. In an old leading case of Mitchell v Reynolds Lord Smith LC said,...
and has largely been submerged in the twentieth century by statutory interventions on collective labour law
Labour law
Labour law is the body of laws, administrative rulings, and precedents which address the legal rights of, and restrictions on, working people and their organizations. As such, it mediates many aspects of the relationship between trade unions, employers and employees...
, modern antitrust
Antitrust
The United States antitrust law is a body of laws that prohibits anti-competitive behavior and unfair business practices. Antitrust laws are intended to encourage competition in the marketplace. These competition laws make illegal certain practices deemed to hurt businesses or consumers or both,...
or competition law
Competition law
Competition law, known in the United States as antitrust law, is law that promotes or maintains market competition by regulating anti-competitive conduct by companies....
, and certain laws governing intellectual property
Intellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
, particularly unfair competition
Unfair competition
Unfair competition in a sense means that the competitors compete on unequal terms, because favourable or disadvantageous conditions are applied to some competitors but not to others; or that the actions of some competitors actively harm the position of others with respect to their ability to...
law. The "absence of any unifying principle drawing together the different heads of economic tort liability has often been remarked upon."
The principal torts can be listed as passing off
Passing off
Passing off is a common law tort which can be used to enforce unregistered trademark rights. The tort of passing off protects the goodwill of a trader from a misrepresentation that causes damage to goodwill....
, injurious falsehood and trade libel (see also Food libel laws
Food libel laws
Food libel laws, also known as food disparagement laws and informally as veggie libel laws, are laws passed in 13 U.S. states that make it easier for food producers to sue their critics for libel. These 13 states include Alabama, Arizona, Colorado, Florida, Georgia, Idaho, Louisiana, Mississippi,...
), conspiracy
Conspiracy (civil)
A 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....
, inducement of breach of contract
Breach of contract
Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance....
, tortious interference
Tortious interference
Tortious interference, also known as intentional interference with contractual relations, in the common law of tort, occurs when a person intentionally damages the plaintiff's contractual or other business relationships...
(such as interference with economic relations or unlawful interference with trade), and watching and besetting. 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 demonstrated economic tort's affinity to competition and labour law. In Mogul Steamship Co Ltd v McGregor, Gow & Co
Mogul Steamship Co Ltd v McGregor, Gow & Co
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...
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
Cartel
A cartel is a formal agreement among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production. Cartels usually occur in an oligopolistic industry, where there is a small number of sellers and usually involve homogeneous products...
was ruled lawful and "nothing more [than] a war of competition waged in the interest of their own trade." Nowadays, this would be considered a criminal cartel.
Workplace relations
In English labour lawLabour law
Labour law is the body of laws, administrative rulings, and precedents which address the legal rights of, and restrictions on, working people and their organizations. As such, it mediates many aspects of the relationship between trade unions, employers and employees...
the most notable case is Taff Vale Railway v Amalgamated Society of Railway Servants. The House of Lords
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....
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
Trade Disputes Act 1906
The Trade Disputes Act 1906 was an Act of the Parliament of the United Kingdom passed under the Liberal government of Sir Henry Campbell-Bannerman...
Further torts used against unions include conspiracy, interference with a commercial contract or intimidation.
LegalDay Economic Torts
Inducing breach of contract
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 the 2007 case of OBG v Allan.- Lumley v Gye (1853) 2 E & B 216
- South Wales Miners’ Federation v Glamorgan Coal Co Ltd [1905] AC 239, “It would be idle to sue the workmen, the individual wrong-doers, even if it were practicable to do so. Their counsellors and protectors, the real authors of the mischief, would be safe from legal proceedings.”
- Quinn v Leathem [1901] AC 495, at 510, Lord Macnaghten “a violation of legal right committed knowingly is a cause of action ... it is a violation of a right to interfere with contractual relations recognised by law if there be no sufficient justification for the interference.”
- Douglas v Hello! Ltd (No 3) [2005] EWCA Civ 595
- Mainstream Properties v Young [2005] EWCA Civ 861
- Emerald Construction v Lowthian [1966] 1 WLR 691, Lord Denning MR, “if the officers deliberately sought to get this contract terminated, heedless of its terms, regardless whether it was terminated by breach or not, they would do wrong.”
- Camden Nominees v Forcey [1940] Ch 352
- British Motor Trade Association v Salvadori [1949] Ch 556, Roxburgh J, “in my judgment, any active step taken by a defendant, having knowledge of the covenant, by which he facilitates a breach of covenant is enough.”
- Merkur Island Shipping v Laughton [1983] 2 AC 570, Lord Diplock, "all prevention of due performance of a primary obligation ... even though no secondary obligation to make monetarycompensation thereupon came into existence."
- Torquay Hotel Co v Cousins [1969] 2 Ch 106
- Millar v Bassey [1994] Entertainment & Media LR 44
- Edwin Hill v First National [1988] 3 All ER 801
- Brimelow v Casson [1924] 1 Ch 302
- Glamorgan Coal Company v South Wales Miners Federation [1903] 2 KB 545, Romer LJ, “I think that regard might be had to the nature of the contract broken; the position of the parties to the contract; the grounds for the breach; the means employed to procure the breach; the relation of the person procuring the breach to the person who breaks the contract; and I think also to the object of the person in procuring the breach.” Lord James, [1905] AC 238 at 252 “The fact that their motives were good in the interests of those they moved to action does not form any answer to those who have suffered from the unlawful act.”
See also
- Trade Disputes Act 1906Trade Disputes Act 1906The Trade Disputes Act 1906 was an Act of the Parliament of the United Kingdom passed under the Liberal government of Sir Henry Campbell-Bannerman...
- Trade Union and Labour Relations (Consolidation) Act 1992Trade Union and Labour Relations (Consolidation) Act 1992The Trade Union and Labour Relations Act 1992 is a UK Act of Parliament which regulates British labour law. The Act applies in full in England and Wales and in Scotland, and partially in Northern Ireland....