Business Torts

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<p>Business Torts By: Nature and Definition: a tort that impairs some aspect of an economic interest or business relationship and causes economic loss rather than property damage or bodily harm. (Blacks Law Dictionary). intentional torts not committed against persons or property. Instead, the harm done is to intangible assets, such as economic interests or business relationships. civil wrongs that are committed by or against an organization. They frequently involve harm done to the organizations intangible assets, such as its business relationships with clients or its intellectual property. Some common categories of business torts include fraud, breach of fiduciary duty, and unfair competition.</p> <p>Business Torts in other Jurisdiction: Breach of Fiduciary Duty Civil Conspiracy Civil Theft Constructive Trust Conversion Equitable Accounting Floridas Deceptive &amp; Unfair Trade Practices Act Fraud Fraud in the Inducement Injurious Falsehood Theft and Loss of Business Opportunities Theft of Trade Secrets Tortious Interference Business Torts in the Philippines: Interference with contract Interference with prospective advantage Unfair Competition Securities related torts Relief: Typical legal remedies include economic losses if they can be proven with certainty and mental distress. Additionally, punitive damages may be awarded if malice on the part of the wrongdoer can be established. Equitable remedies may include injunctive relief in the form of a negative injunction that would be used to prevent the wrongdoer from benefiting from any contractual relationship that may arise out of the interference, i.e., the performance of a singer who was originally contracted with the plaintiff to perform at the same time. I. Interference with contract Occurs where the tortfeasor convinces a party to breach the contract against the plaintiff, or where the tortfeasor disrupts the ability of one party to perform his obligations under the contract, thereby preventing the plaintiff from receiving the performance promised. The classic example of this tort occurs when one party induces another party to breach a contract with a third party, in circumstances where the first party has no privilege to act as itPage 1 of 20</p> <p>Business Torts</p> <p>does and acts with knowledge of the existence of the contract. Such conduct is termed tortious inducement of breach of contract. Article 1314, Civil Code: Any third person who induces another to violate his contract shall be liable for damages to the other contracting party. Exemption to the relativity of contracts in Article 1311 of the Civil Code Elements: 1. Existence of a valid contract 2. Knowledge on the part of the third person of the existence of the contract 3. Interference of the third person without legal justification Existence of a valid contract No tort is committed if the party has already broken the contract and offers to contract with the defendant No action can be maintained if the contract is void Knowledge on the part of the tort interfeasor Is the existence of malice necessary? It is enough if the wrongdoer, having knowledge of the existence of the contract relation, in bad faith sets about to break it up. Whether the motive is to benefit himself or gratify his spite by working mischief to the other is immaterial. Interference without legal justification Is competition a legal justification? Yes if in the competition: a.) defendants purpose is justifiable and b.) the defendant employs no means of fraud or deception which are regarded as unfair. If it is an unfair competition or the dominant purpose is to inflict harm or injury: Not a legal justification.</p> <p>Extent of Liability: Whatever may be the character of the liability which a stranger to a contract may incur by advising or assisting one of the parties to evade performance, such stranger cannot become more extensively liable in damages for the non-performance of the contract than the party in whose behalf he intermeddles. (Daywalt vs. La Corporacion)</p> <p>Business Torts Page 2 of 20</p> <p>When competition constitutes justifiable interference; when not. Competition in business, even though carried to the extent of ruining a rival, constitutes justifiable interference in anothers business relations, and is not actionable, so long as it is carried on in furtherance of ones own interest, and by means that are lawful. Interference with the business relations of another by means of competition is not justifiable where the methods of competition employed are unfair or not lawful, or where the dominant purpose of the competition is to inflict harm or injury and not to further ones business. G.R. No. 86683 January 21, 1993 PHILIP S. YU, petitioner, vs. THE HONORABLE COURT OF APPEALS, THE HONORABLE PRESIDING JUDGE, RTC OF MANILA, BRANCH XXXIV (34) and UNISIA MERCHANDISING CO., INC., respondents. Facts: Philip S. Yu, petitioner herein, has an exclusive sales agency agreement with the House of Mayfair since 1987. As such, petitioner is the exclusive distributor of House of Mayfair wall covering products in the Philippines. Unisia Marketing, herein private respondent, imported the same goods (via the FNF Trading), who eventually sold the merchandise in the domestic market. According to the petitioner, private respondent together with the FNF trading misled House of Mayfair to believe that the goods ordered by them were intended for shipment to Nigeria. However, the truth was such goods were delivered and sold in the Philippines. Private respondent professed ignorance of the exclusive contract in favor of petitioner. Petitioner filed a suit for injunction before the RTC which sought to enjoin the sale and distribution by private respondent of the same goods in the same market. Petitioner anchors his plea for redress on his perception that private respondent has distributed and continues to sell Mayfair covering products in contravention of petitioner's exclusive right conferred by the covenant with the House of Mayfair. RTC dismissed the suit. Petitioner filed a petition for review with the CA, but was also dismissed. Issue : Whether or not Unisia Marketing was guilty of interference of contractual relations. Held: Yes, Unisia Marketing was guilty of interference of contractual relations Ratio : The liability of private respondent, if any, does not emanate from the four corners of the contract for undoubtedly, Unisia Merchandising Co., Inc. is not a party thereto but its accountability is "an independent act generative of civil liability".</p> <p>Business Torts Page 3 of 20</p> <p>Respondent court overlooked that the House of Mayfair was deceived that the goods ordered through FNF trading were to be shipped to Nigeria only, but the goods were actually sent to and sold in the Philippines. A ploy of this character is akin to the scenario of a third person who induces a party to renege on or violate his undertaking under a contract, thereby entitling the other contracting party to relief therefrom (Article 1314, New Civil Code). G.R. No. L-9356 February 18, 1915 C. S. GILCHRIST, plaintiff- appellee, vs. E. A. CUDDY, ET AL., defendants. JOSE FERNANDEZ ESPEJO and MARIANO ZALDARRIAGA, appellants. Facts: C. S. Gilchrist, the plaintiff, was the proprietor of Eagle theater located in Iloilo. Defendant Cuddy was the owner of the film Zigomar. Cuddy rented the same to plaintiff Gilchrist for P 125.00. The film was to be exhibited in Gilchrist's theater during the week beginning May 26, 1913. Later, defendants Espejo and Zaldarriaga, who were also operating a theater in Iloilo, also obtained from Cuddy a contract for the exhibition of the same film to be shown in their theater for the same week with a rental amount of P 350.00. Gilchirst commenced an action seeking that the court issue a preliminary injunction against the defendants Espejo and Zaldarriaga prohibiting them from receiving, exhibiting or using said film in Iloilo during the last week of May 1913, or at any time prior to the delivery to the plaintiff. Gilchrist was able to procure a preliminary injunction. Espejo and Zaldarriaga moved for the dissolution of the preliminary injunction. Issue: Whether or not Espejo and Zaldarriaga were guilty of interference in contractual relations. Held: Yes, Espejo and Zaldarriaga were guilty of interference in contractual relations Ratio : Cuddy willfully violated his contract in order that he might accept the appellant's offer of P350 for the film for the same period. The appellants must necessarily have known at the time they made their offer to Cuddy that the latter had booked or contracted the film for six weeks from April 26. Therefore, the inevitable conclusion is that the appellants knowingly induced Cuddy to violate his contract with another person. In the case at bar the only motive for the interference with the Gilchrist Cuddy contract on the part of the appellants was a desire to make a profit by exhibiting the film in their theater. There was no malice beyond this desire; but this fact does not relieve them of the legal liability for interfering with that contract and causing its breach.</p> <p>Business Torts Page 4 of 20</p> <p>Advising Third Person The right to give honest and friendly advice has been recognized where the interest of the person giving it are in some way involved. In our jurisdiction, interference by giving such advice is not actionable. The purpose is to protect the public and private interests and freedom of communication, decent conduct, and professional as well as lay counsel. G.R. No. L-13505 February 4, 1919 GEO. W. DAYWALT, plaintiff- appellant, vs. LA CORPORACION DE LOS PADRES AGUSTINOS appellees.</p> <p>RECOLETOS,</p> <p>ET AL.,</p> <p>defendants-</p> <p>Facts: In 1902, Teodorica Endencia, executed a contract to convey a parcel of land to Geo W. Daywalt. It was agreed that a deed should be executed as soon as the Torrens Certificate to the land is acquired by Teodorica. The Torrens certificate was in time issued to Teodorica Endencia, but in the course of the proceedings relative to the registration of the land, it was found by official survey that the area of the tract enclosed in the boundaries stated in the contract was about 1.248 hectares of 452 hectares as stated in the contract. In view of this development Teodorica Endencia became reluctant to transfer the whole tract to the purchaser, asserting that she never intended to sell so large an amount of land and that she had been misinformed as to its area. This attitude of hers led to litigation in which Daywalt finally succeeded, upon appeal to the Supreme Court, in obtaining a decree for specific performance; and Teodorica Endencia was ordered to convey the entire tract of land to Daywalt pursuant to the contract of October 3, 1908, which contract was declared to be in full force and effect. The defendant, La Corporacion de los Padres Recoletos, is a religious corporation which was tge owner of an estate on the immediately adjacent to the land which Teodorica had sold to Geo. W. Daywalt; and for many years the Recoletos Fathers had maintained large herds of cattle on the farms referred to. Their representative was father Isidoro Sanz. Father Sanz had long been well acquainted with Teodorica and exerted over her an influence and ascendency due to his religious character as well as to the personal friendship which existed between them. Father Sanz was fully aware of the existence of the contract of 1902 by which Teodorica agreed to sell her land to the plaintiff. In one of the causes of action stated in the complaint, the plaintiff seeks to recover from the defendant corporation the sum of P500,000, as damages, on the ground that said corporation, for its own selfish purposes, unlawfully induced Teodorica Endencia to refrain from the performance of her contract for the sale of the land in question and to withhold delivery to the plaintiff of the Torrens title. The cause of action here stated is based on liability derived from the wrongful interference of the defendant in the performance of the contract between the plaintiff and Teodorica. Issue: Whether or not the defendant was guilty of interference in contractual relations. Held: NoBusiness Torts Page 5 of 20</p> <p>Business Torts Page 6 of 20</p> <p>Ratio: The court found that while it is true that the fact that the officials of the defendant corporation may have advised Teodorica not to carry the contract into effect would not constitute actionable interference with such contract. To our mind a fair conclusion on this feature of the case is that father Juan Labarga and his associates believed in good faith that the contract could not be enforced and that Teodorica would be wronged if it should be carried into effect. Any advice or assistance which they may have given was, therefore, prompted by no mean or improper motive. It is not, in our opinion, to be denied that Teodorica would have surrendered the documents of title and given possession of the land but for the influence and promptings of members of the defendants corporation. But we do not credit the idea that they were in any degree influenced to the giving of such advice by the desire to secure to themselves the paltry privilege of grazing their cattle upon the land in question to the prejudice of the just rights of the plaintiff. G.R. No. 120554 September 21, 1999 So Ping Bun vs. Court of Appeals, Tek Hua Enterprises Corp. and Manuel C. Tiong Facts: In 1963, Tek Hua Trading Co, through its managing partner, So Pek Giok, entered into lease agreements with lessor Dee C. Chuan &amp; Sons Inc. (DCCSI). Subjects of four (4) lease contracts were premises located at Nos. 930, 930-Int., 924-B and 924-C, Soler Street, Binondo, Manila. Tek Hua used the areas to store its textiles. The contracts each had a one-year term. They provided that should the lessee continue to occupy the premises after the term, the lease shall be on a month-to-month basis. When the contracts expired, the parties did not renew the contracts, but Tek Hua continued to occupy the premises. In 1976, Tek Hua Trading Co. was dissolved. Later, the original members of Tek Hua Trading Co. including Manuel C. Tiong, formed Tek Hua Enterprising Corp., herein respondent corporation. So Pek Giok, managing partner of Tek Hua Trading, died in 1986. So Pek Giok's grandson, petitioner So Ping Bun, occupied the warehouse for his own textile business, Trendsetter Marketing. On August 1, 1989, lessor DCCSI sent letters addressed to Tek Hua Enterprises, informing the latter of the 25% increase in rent effective September 1, 1989. The rent increase was later on reduced to 20% effective January 1, 1990, upon other lessees' demand. Again on December 1, 1990, the lessor implemented a 30% rent increase. Enclosed in these letters were new lease contracts for signing. DCCSI warned that failure of the lessee to accomplish the contracts shall be deemed as lack of interest on the lessee's part, and agreement to the termination of the lease. Private respon...</p>