Economic Tort: Definition and Meaning

The protection of the claimant's economic interests is the main objective of ECONOMIC TORTS, as their name suggests. These torts include dishonesty, malicious falsehood, intimidation, simple conspiracy, unlawful conspiracy, causing the breach of contract, and unlawful trade interference. These are all intentional torts.

They also include passing off, one of the most beneficial economic torts, which, despite typically involving intentional harm in practice, is actually a strict liability tort. Last but not least, although it is used sparingly, negligence is also a type of economic tort. Economic torts are typically divided into two groups: general torts and misrepresentation torts.

Conspiracy, causing a breach of contract, intimidation, and illegal interference with trade are all examples of general economic torts. The economic torts of misrepresentation include passing off, lying with malice, and deceit.

What is the Meaning of Economic Torts

Economic torts, also known as business torts, are crimes that fall under the common law's rules of liability and are committed in the course of business transactions. Examples include interfering with business or economic relationships and other crimes that are likely to result in pure economic loss. "Economic torts" is a term used to describe a class of torts.

With a fast-growing economy, Indian courts will probably hear more instances involving economic torts in the near future. Economic torts are a potent solution to particular business issues. When it comes to extending the scope of recognised torts, English and Indian courts are quite cautious. So, economic torts continue to be a recognised category that is only loosely defined by precedents.

Nature Of Economic Torts

Economic torts are unlawful interference with business or trade protection. The area, which includes the doctrine of restraint of trade, was largely supplanted in the twentieth century by statutory interventions on collective labour law, modern competition law, and certain laws governing intellectual property, particularly unfair competition law. This was especially true in the United Kingdom. Many people have noted the "lack of any unifying theory tying together the different heads of economic tort liability."


The Quinn v. Leathem kind of conspiracy, which uses only legal methods but seeks an illegal objective, and the type that uses illegal means are the two types of conspiracies. As a result, the tort may take the form of an illegal conspiracy, where the combination uses illegal methods, or it may take the form of a plain conspiracy, where the "magic of plurality" causes a combination to cause harm even when no illegal means are used.

Despite the fact that these two torts both include an agreement or combination between two or more parties with the purpose to damage the claimant, their main focus is distinct. They need to be examined independently because of this. By doing this, their connection to the other economic torts will become clear.

Unlawful Conspiracy

In the context of economic torts, the issue of intention is contentious. Although they all call for purposeful injury, it is unknown whether the definition of intentionality varies depending on the situation. Hence, dicta can be discovered that merely requires that the unlawful conspiracy's central act be intentional and have the intended result of harming the claimant.

A common design must be shared by all participants in a conspiracy, albeit they do not all need to participate at the same time. It is obvious that in order to be held liable for a conspiracy, it is only necessary for the parties to band together to ensure the performance of acts that, in the end, turn out to be unlawful.

In the case of CBS Songs Ltd. v. Amstrad, there was no common design, hence complicity liability was not possible. Because a common design is required, culpability cannot arise from "mere facilitation." Liability cannot arise from an agreement alone; there must also be CONCERTED ACTION that results from the agreement.

Simple Conspiracy

In this case, there is a liability for an agreement to perform acts that are lawful in and of themselves with the express or implied intent to harm the claimant and that harm him. Allen v. Flood makes an exception for simple conspiracy. Simple conspiracy, according to Lord Denning MR, is "a modern intrusion altogether." Quinn v. Leathem and Mogul Steamship Co. v. McGregor both established simple conspiracy in their contemporary version.


The use of deceit as a defence against commercial misunderstanding is rather restricted. Given that "charges of fraud should not be easily made or evaluated," it is difficult for a tort to succeed, and it offers no defence against more broad accusations of fraud.

Therefore, the only party eligible to file a claim under the traditional two-party tort theory is the one who was purposefully duped by the defendant. Liability for negligent misrepresentation and state regulation of trade misdescriptions significantly outweigh the tort in importance.

Deceit Includes

  • False representation

  • Knowledge of falsity

  • Intention that the claimant should act in reliance

  • Reliance by the claimant: materiality

  • Damage

A statement of opinion, intention, or legislation that is not really believed in qualifies as a misrepresentation if it is made with regard to a past or current fact. It may be stated outright or inferred. In Gordon v. Selico, the defendant was held accountable for deceitfully hiding the existence of dry rot before renting the plaintiff's property.

The defendants did not appeal Goulding J.'s ruling that the concealment amounted to a deceptive representation that the flat was not subject to dry rot. Whether it is genuine or not, the false statement must be uttered: "KNOWINGLY without belief in its validity or irresponsibly and carelessly." There must at least be a disregard for the truth. In Derry v. Peek, the House of Lords spoke authoritatively about the mental state required for deceitful behaviour on the part of a defendant. For the purposes of this tort, foreseeable reliance is insufficient; there must also be an intention that the claimant should rely on the representation.


Confusion still exists over the tort of "conspiracy," which is a completely recent idea. While establishing the use of illegal means to cause harm is required for a conspiracy involving unlawful means, a conspiracy involving legal means is generally viewed as incongruous.

Why something that is already legal when done by one person should be made illegal by a group of people is the key question. Because it is a new area of law, the law of economic torts cannot have its borders rigidly enforced. Using the criteria of justice and the practicality of the circumstance, the scope of tort law continues to expand.

Frequently Asked Question

Q1. What is the economic theory of torts?

Ans. Tort law is a private remedy that must be initiated by the victim. Deterrence is a key component of the economic theory of tort law. The victim must demonstrate that the injury was the cause of the damages he or she suffered in order to be awarded compensation.

Q2. What is the economic theory of crime?

Ans. The main contention of the economic theory of crime is that criminals rationally maximise their own self-interest (utility) while taking into account the constraints (price, income) they encounter in the marketplace and elsewhere.

Q3. What is the economic essence of tort law?

Ans. The protection of the claimant's economic interests is the main objective of Economic Torts, as their name suggests. These torts include dishonesty, malicious falsehood, intimidation, simple conspiracy, unlawful conspiracy, causing the breach of contract, and unlawful trade interference.

Updated on: 13-Apr-2023


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