Unfair business practices
Encyclopedia
Unfair business practices encompass fraud
, misrepresentation
, and oppressive or unconscionable
acts or practices by business
, often against consumer
s and are prohibited by law in many countries. For instance, in the European Union
, each member state must regulate unfair business practices in accordance with the Unfair Commercial Practices Directive, subject to transitional periods. Unfair business practices may arise in many areas, including:
In addition to providing for the award of compensatory damages
, laws may also provide for the award of punitive damages as well as the payment of the plaintiff's legal fees.
At common law
, individuals were not entitled to attorneys fees or punitive damages for wrongful acts committed by businesses in most states. Most often, laws prohibiting unfair business practices require consumers to send demand letter to the business prior to commencing with a law suit. If the business fails to make a reasonable offer of settlement within a specified period of time, and is subsequently found liable in court, it may be liable for punitive damages and the injured parties reasonable attorney's fees under many statutes. In some instances, the statutes provide for prevailing plaintiffs to recover double or triple the actual damages against non-settling defendants.
When statutes prohibiting unfair and deceptive business practices provide for the award of punitive damages and attorneys fees to injured parties, they provide a powerful incentive for businesses to resolve the claim through the settlement process rather than risk a more costly judgment in court.
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
, misrepresentation
Misrepresentation
Misrepresentation is a contract law concept. It means a false statement of fact made by one party to another party, which has the effect of inducing that party into the contract. For example, under certain circumstances, false statements or promises made by a seller of goods regarding the quality...
, and oppressive or unconscionable
Unconscionability
Unconscionability is a term used in contract law to describe a defense against the enforcement of a contract based on the presence of terms that are excessively unfair to one party...
acts or practices by business
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
, often against consumer
Consumer
Consumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...
s and are prohibited by law in many countries. For instance, in the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
, each member state must regulate unfair business practices in accordance with the Unfair Commercial Practices Directive, subject to transitional periods. Unfair business practices may arise in many areas, including:
- TenancyLeasingLeasing is a process by which a firm can obtain the use of a certain fixed assets for which it must pay a series of contractual, periodic, tax deductible payments....
matters - Matters involving the purchase of products and services by consumers
- Matters involving insuranceInsuranceIn law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
claims and the settlement thereof - Debt collection in cases of defaultDefault (finance)In finance, default occurs when a debtor has not met his or her legal obligations according to the debt contract, e.g. has not made a scheduled payment, or has violated a loan covenant of the debt contract. A default is the failure to pay back a loan. Default may occur if the debtor is either...
In addition to providing for the award of compensatory damages
Damages
In law, damages is an award, typically of money, to be paid to a person as compensation for loss or injury; grammatically, it is a singular noun, not plural.- Compensatory damages :...
, laws may also provide for the award of punitive damages as well as the payment of the plaintiff's legal fees.
At common law
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
, individuals were not entitled to attorneys fees or punitive damages for wrongful acts committed by businesses in most states. Most often, laws prohibiting unfair business practices require consumers to send demand letter to the business prior to commencing with a law suit. If the business fails to make a reasonable offer of settlement within a specified period of time, and is subsequently found liable in court, it may be liable for punitive damages and the injured parties reasonable attorney's fees under many statutes. In some instances, the statutes provide for prevailing plaintiffs to recover double or triple the actual damages against non-settling defendants.
When statutes prohibiting unfair and deceptive business practices provide for the award of punitive damages and attorneys fees to injured parties, they provide a powerful incentive for businesses to resolve the claim through the settlement process rather than risk a more costly judgment in court.
See also
- Competition lawCompetition lawCompetition law, known in the United States as antitrust law, is law that promotes or maintains market competition by regulating anti-competitive conduct by companies....
plan of business - Competition policy
- Consumer protectionConsumer protectionConsumer protection laws designed to ensure fair trade competition and the free flow of truthful information in the marketplace. The laws are designed to prevent businesses that engage in fraud or specified unfair practices from gaining an advantage over competitors and may provide additional...
- Misleading or deceptive conductMisleading or deceptive conductMisleading or deceptive conduct is a doctrine of Australian law.Section 18 of the Australian Consumer Law , which is found in schedule 2 of the Competition and Consumer Act 2010 prohibits conduct by corporations in trade or commerce which is misleading or deceptive or is likely to...
(Australian law) - Sucker listSucker listA sucker list is a list of people who have previously been successfully solicited for something.The major areas of "sucker lists" are solicitation of donations and fraud....
- Unfair competitionUnfair competitionUnfair 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...