Economic torts deal with acts done intentionally to cause harm to another's right to earn a living by

wrongful means.

This tort seeks to protect the sanctity of contracts and trade generally.

For this reason, we have to distinguish between acts done as (1) genuine competition; and (2) pressure
which interferes with the trade or contract of another through illegal means.

PASSING OFF

This is the purest of economic torts. Its purpose is almost exclusively the protection of economic
interests.

We can begin consideration of this tort by contrasting it with the tort of deceit. While deceit protects a
businessman, who is the direct target of a fraudulent misrepresentation, passing off protects traders
against misrepresentations aimed at their customers, which are calculated to damage their trade or
goodwill.

The common law at first confined the action to the use by A of B's trade name or trade mark in
connection with A's business or goods in a way intended to make B's customers believe the goods were
produced by B. So, the action was aimed at dishonest competitive practices.

In Reddaway v Banham, it was held that although the name of the defendant's belting was a true
description of the product, an injunction would lie against him since it was likely to mislead the public to
think that it was a product of the plaintiffs. The principle is that a person passes off the goods of another
if he sells his goods under a name that is likely to deceive purchasers to think that they are buying the
goods of the other person, although the name may be a true description of the goods.

In J. Bolinger v Costa Bra Wine, it was held that since the name of the defendant's product was likely to
mislead the general public into thinking that it was a product from Champagne, an injunction would lie.
The principle is that where a person uses an untruthful description for goods so as to make it appear as
if the products were of another, it amounts to passing off.

In Erven Warnink BV v Townsend & Sons (Hull) Ltd, it was held that since the supply of the defendant's
product was calculated to injure the business and goodwill of the plaintiffs, the action would succeed.
The principle is where a defendant makes a misrepresentation of products to customers to injure the
business and goodwill of the plaintiff, it is an actionable passing off.

In Appenteng Mensah & Co. v Alpro Industrial Products, it was held per Hayfron-Benjamin J that since
the two names were phonetically and visually similar and the tubes and packages were of the same sizes
and shapes, it was likely to deceive the public and thus the defendant's registration must be cancelled.
The principle is where the goods of a defendant are made in such a way as to deceive the public into
thinking that they are products of the plaintiff, it constitutes an actionable passing off. See also, National
Biscuit Co. v. Pioneer Biscuit Co., Ltd.

In the Jif Lemon case, in answer to the submission that a trader is entitled to expect the public to
exercise a reasonable degree of diligence in distinguishing between competing products, Lord Oliver
said:
"The essence of the action for passing off is a deceit practised on the public and it can be no answer, in a
case where it is demonstrable that the public has been or will be deceived, that they would not have
been if they had been more careful, more literate or more perspicacious. Customers have to be taken as
they are found."

So, a trader who discovers from something that the customer says or does that the customer is
mistaking his product for a competitor's though not from anything he has said, may be liable in passing
off if he does not correct the customer's self-induced misapprehension.

INTERFERENCE WITH CONTRACTUAL RELATIONS

It is a tort for A to intentionally induce B to break his contract with C, or to prevent B from performing it,
both to the damage of C.

The damage is what C would suffer in the ordinary course of business, as well as the intended damage.

This point has been beautifully illustrated in Lumley v Gye, it was held that the defendant was liable to
the plaintiff in damages for the loss occasioned by the singer's breach of the contract resulting from the
defendant's act. The principle is, a person who interrupts the relationship between two parties to a
contract by maliciously procuring one to commit a breach of the contract during the subsistence of the
contract commits a tort and is liable to the injured party in damages if he suffers damage as a result of
the breach.

Per Erle J, "This principle is supported by good reason. He who maliciously procures a damage to
another by violation of his right ought to be made to indemnify, and that whether he procures an
actionable wrong or a breach of contract. He who procures the non-delivery of goods according to
contract may inflict an injury, the same as he who procures the abstraction of goods after delivery, and
both ought on the same ground to be made responsible. The remedy on the contract may be
inadequate, as where the measures of damages is restricted; or in the case of nonpayment of a debt
where the damage may be bankruptcy to the creditor who is disappointed, but the measure of damages
against the debtor is interest only; or, in the case of the non-delivery of the goods, the disappointment
may lead to a heavy forfeiture under a contract to complete a work within a time, but the measure of
damages against the vendor of the goods for non-delivery may be only the difference between the
contract price and the market value of the goods in question at the time of the breach. In such cases, he
who procures the damage maliciously might justly be made responsible beyond the liability of the
contractor."

In D.C Thompson v Deakin, the court held that since the acts of the defendants had been a lawful
exercise of their right, they were not liable. The principle is, a person does not commit the tort of
interference with contractual relations if he acts lawfully within his rights. To be liable for this tort, there
must be an intention to cause damage to the plaintiff.

Thus, from the case above, the following additional points can be noted about this tort:

a) There must be a valid contract (any kind of contract); contractual expectations are not enough.

So, if A teaches B dancing in the hope of engaging him and C induces him to sign instead with C, no tort.
b) Carelessness is not enough because the tort is one of intention. The intention here requires
knowledge of the contract, or, as Lord Denning put it in Torquay Hotel Co. Ltd. v. Cousins, the defendant
must "turn a blind eye to it and intend to interfere with it."

c) But recklessness is sufficient.

d) No liability if the inducement is to terminate contract lawfully.

e) The plaintiff must be the intended target.

Inducement for purposes of the action may assume three forms:

a) Direct Persuasion, i.e. persuasion of A to break with B. Here the breach must be a reasonable
consequence of the inducement. The defendant may act through an intermediary. Liability does not
require the defendant to use unlawful means; persuasion is enough; on the other hand, mere advice is
not persuasion and involves no liability. See also Camden v. Forcey.

b) Direct prevention (intervention) where A docs an unlawful act (e.g. kidnaps B) to prevent B from
performing his contract with C: see GWK Ltd. v. Dunlop Rubber Co. Ltd.

c) Indirect prevention or intervention, i.e. when A induces B to breach his contract with C, see J.T.
Stratford & Sons Ltd. v. Lindley. Here, a breach must be a necessary consequence of the defendant's
conduct, and has to be unlawful. "Indirect interference is only unlawful if unlawful means arc used:" per
Lord Denning in Torquay Hotel Co. Ltd. v. Cousins.

Defence

The defendant may plead justification.

The point is illustrated by Brimelow v. Casson, it was held that the defendant's action was justified
because the plaintiff's conduct was compelling the girls to resort to immorality.

Per Russell LJ "Prima facie interference with a man's contractual rights and with his right to carry on his
business as he wills is actionable; but it is clear on the authorities that interference with contractual
rights may be justified; a fortiori the inducing of others not to contract with a person may be justified."

Further, if A has a legally enforceable financial stake in IVs affairs, he may be justified in inducing B to
break his contract with C. Sec also Merkur Island Shipping Co. v. Laughlon.

In Ford v Foster, it was held that although there was misrepresentation on the part of the plaintiff, such
misrepresentation did not bar him from seeking the remedy he sought. The principle is that, the courts
will not intervene in an action in passing off or trademark where there is false misrepresentation in the
trade mark or where the trade itself is fraudulent. Also, an exclusive right to a trademark may become
publici juris and when it so becomes, a defendant who uses such trademark has a defence.

INJURIOUS FALSEHOOD

Care should be taken not to confuse this tort with defamation. The tort protects interests in the
reputation and goodwill of one's business.
In Ratcliffe v Evans, it was held that although the words are not actionable per se, since they were
calculated to cause loss of business to the plaintiff and did in fact cause the loss, the defendants were
liable. The principle is that the malicious publishing of untrue statements about a defendant's business
intended to cause loss of business and which does, in fact, cause the loss in the ordinary course of things
is actionable.

The law was thus stated per Bowen LJ that: "That an action will lie for written or oral falsehoods, not
actionable per se nor even defamatory, where they are maliciously published, where they are calculated
in the ordinary course of things to produce, and where they do produce, actual damage, is established
law. Such an action is not one of libel or of slander, but an action on the case for damage wilfully and
intentionally done without just occasion or excuse, analogous to an action for slander of title. To support
it, actual damage must be shewn, for it is an action which only lies in respect of such damage as has
actually occurred."

Any type of interest in land, trademarks, patent, trade names, copyright, company shares, all can bring
an action in this tort.

For this proposition, see Joyce v. Motor Surveys, where it was held that, the defendant's words were
false and calculated to drive the plaintiff out of business so as for him to quit the premises and the
defendant thus was liable. The principle is that, making false statements maliciously to injure the
business of another is actionable.

The action will also be available, where business reputation is maliciously disparaged; but no imputation
entitling action in defamation is made. Interference with prospective advantage, even social, comes
within the ambit of this tort.

Thus, to deprive A of a marriage by falsely informing the intended husband that A is already married is
tortious: see Shepherd v. Wakeman

For this action, the test is whether a reasonable man will take the defendant's claim in denigration of
the plaintiff's goods seriously.

Thus, in White v Mellin, it was held that since the plaintiff could not prove that any damage had been
caused as a result of the statement, the defendant was not liable. The principle is that a person is not
liable for the tort of injurious falsehood unless the plaintiff proves damage resulting from the alleged
injurious falsehood.

Per Lord Watson: "The wrong complained of being the slander of goods, the fact that the
representations made by the defendant in the label already referred to might be calculated to disparage
the food manufactured by the plaintiff and to interfere with its sale can afford no cause of action. Every
extravagant phrase used by a tradesman in commendation of his own goods may be an implied
disparagement of the goods of all others in the same trade; it may attract customers to him and
diminish the business of others who sell as good and even better articles at the same price; but that is a
disparagement of which the law takes no cognizance. In order to constitute disparagement which is, in
the sense of law, injurious, it must be shewn that the defendant's representations were made of and
concerning the plaintiff's goods; that they were in disparagement of his goods and untrue; and that they
have occasioned special damage to the plaintiff. Unless each and all of these three things be established,
it must be held that the defendant has acted within his rights and that the plaintiff has not suffered any
legal injuria.”

The court further added that, “Damages and injunction are merely two different forms of remedy
against the same wrong; and the facts which must be proved in order to entitle a plaintiff to the first of
these remedies are equally necessary in the case of the second. The onus resting upon a plaintiff who
asks an injunction, and does not say that he has as yet suffered any special damage, is if anything the
heavier, because it is incumbent upon him to satisfy the Court that such damage will necessarily be
occasioned to him in the future."

In sum, for the action for injurious falsehood to succeed the following requirements must be
established:

a) The plaintiff must prove malicious statement, by showing, for e.g. absence of belief in the truth of the
statement on the part of the maker, the defendant.

b) The statement must be a false one about the plaintiff or his property. Not just that a false statement
has caused him harm.

c) There must be publication i.e. the statement must be made to a third party.

d) The plaintiff must prove that the false statement caused him pecuniary loss.

CONSPIRACY

This action is an off-shoot of the criminal law.

It consists in an agreement between two or more persons to injure X by unlawful means or in a

Sometimes an act if done by an individual will be lawful, but becomes unlawful by virtue of the fact that
it is done in combination. This is because of the power of the combination. The unlawful acts may be

(a) criminal; (b) tortious; or (c) acts in breach of statute.

In case of (c), the plaintiff should have an independent cause of action for the breach of the statute.

In the case of conspiracy consisting of a combination to do a lawful act to injure X, it must be clear that
the ulterior motive (i.e. the intention) is to damage the plaintiff rather than to serve the bona fide and
legitimate interests of the defendants.

As has been said by an eminent judge Viscount Simon in Crofter Hand Woven Harris Tweed Co. Ltd. v.
Veitch:

"The test is not what is the natural result to the plaintiffs of such combined action, or what is the
resulting damage which the defendants realize or should realize will follow, but what is in truth the
object in the minds of the combiners when they acted as they did. It is not consequence that matters,
but purpose; the relevant conjunction is not 'so that' but 'in order that'."
In Mogul Steamship v McGregor, Gow & Co., it was held that since the defendants were acting lawfully
to increase their profits, they were not liable. The principle is that a person is not liable for the tort of
conspiracy if he acts lawfully.

But there will be liability if the action taken exceeds the protection of legitimate interests: see Huntley v.
Thornton.

Where a defendant acts on mixed motives, liability depends on the predominant motive.

For the defence of justification: see Scala Ballroom. It was held that an injunction would not lie. The
defendants' purpose, the protection of their members' interests, was legal.

In Lonrho Plc v Fayed, it was held that although the predominant purpose of the defendants was to
protect their own interest, that was coupled with intent to injure and thus a prima facie case had been
made. The principle is that for a defendant to be liable for the tort of conspiracy, the plaintiff must prove
an intention to injure, though that need not be the predominant purpose.

INTIMIDATION

This tort is committed if the defendant threatens to use unlawful means to compel A to comply with his
wishes and does so to his detriment; or threatens to use unlawful coercion against A and compels him to
act to the detriment of B.

In Rookes v. Barnard (the BOAC case), the House of Lords held the plaintiff could recover.

Also, in Tarleton v. M'gawky, he was held liable in the tort.

CAUSING LOSS BY UNLAWFUL MEANS

The tort of intimidation, it has been suggested, is only a variant of a broader tort known as "causing loss
by unlawful means."

The broader tort was recognised by Lord Reid in J.T. Stratford & Son Ltd. v. Lindley when he says:

"The respondents' action (in calling a strike) made it practically impossible for the appellants to do any
new business with the barge-hirers. It was not disputed that such interference with business is tortuous,
if any unlawful means are employed."

This tort was by the decision in OBG v. Allan separated from the principle of accessory liability laid down
in Lumley v. Gye, namely inducing breach of a contract.

The tort of causing loss by unlawful means differs from the tort of inducing breach of contract, the
Lumley v. Gye principle, as originally formulated, in at least four respects.

First, unlawful means was a tort of primary liability, not requiring a wrongful act by anyone else, while
Lumley v. Gye created accessory liability, dependent upon the primary wrongful act of the contracting
party.

Secondly, unlawful means required the use of means which were unlawful under some oilier rule
(independently unlawful), whereas liability under Lumley v. Gye required only the degree of
participation in the breach of contract which satisfied the general requirements of accessory liability for
the wrongful act of another person.

Thirdly, liability for unlawful means did not depend upon the existence of contractual relations; it was
sufficient that the intended consequence of the wrongful act was damage in any form, for example, to
the claimant's economic expectations.

Under Lumley v. Gye the breach of contract was of the essence. If there was no primary liability, there
could be no accessory liability.

Fourthly, although both were described as torts of intention, the results which the defendant had to
have intended were different. In unlawful means the defendant had to have intended to cause damage
to the claimant (although usually that would be a means of enhancing his own economic position).

The elements of this tort as stated by Lord Hoffman in OBG v. Allan are:

A wrongful interference with the actions of a third party in which the plaintiff has an economic interest,
and

an intention thereby to cause loss to the claimant.

The most important question here is what constitutes "unlawful means."

Acts against third parties count as unlawful means only if they are actionable by that third party. To
quote Lord Hoffman:

"Unlawful means consists of acts intended to cause loss to the claimant (i.e. plaintiff) by interfering with
the freedom of a third party in a way which is unlawful as against that third party and which is intended
to cause loss to the claimant. It does not include acts which may be unlawful against a third party but
which do not affect his freedom to deal with the claimant."