What is a tort?
A tort is a civil wrong that causes a third party financial or personal loss. The person who committed the act is known as a tortfeasor and can be held liable for damages. Most lawsuits filed against businesses result from torts.
Crimes vs. torts
Like criminal acts, torts can be tried in court, but there are key differences between these types of wrongs.
A crime violates municipal, state, or federal criminal laws and harms society as a whole. Criminal trials can result in fines or prison sentences.
A tort violates common law, civil law, or social norms and hurts a business or individual.
Torts can result from actions that are not intentional or criminal, and they typically require the tortfeasor to pay damages if found guilty in court. In general, tort lawsuits require a lower burden of proof than criminal trials.
Common business tort types
Many negligent business actions or omissions can constitute a tort. A few of the most common include:
- Property torts, which are damages to a third party’s property.
- Liability torts, which occur when a business’s products, services, or employees physically or financially harm a third party.
- Dignitary torts, which include slander and libel accusations that can damage a third party’s reputation.
- Infringement torts, which include mistakenly or deliberately using a third party’s copyrighted material or intellectual property.
- Negligence torts, which occur when a business fails to meet professional standards and financially harms a client or customer.
What to do if your business is accused of a tort
If a third party accuses your business of a tort and files a lawsuit, seek legal advice immediately. Your attorney will advise you whether you should settle out of court or go to trial. If a judge finds your business guilty of the tort, you will be required to pay the harmed party damages.
You should also notify your business insurance provider of the tort accusation in a timely manner. General liability insurance and errors and omissions insurance can help cover the cost of tort lawsuits, including attorney's fees, court costs, and damages.