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Commercial Disparagement

There are various civil wrongs, known as "torts" in the legal field, which allow you to sue the person who injured you. The tort of commercial disparagement, also called business disparagement, occurs when derogatory statements are made about a person's business or a person's title to his or her property with the purpose of discouraging others from dealing with the person. Business disparagement is broad and covers statements about a business being dishonest, unethical, or incompetent. This type of business tort exists to prevent unfair competition between businesses, but can also be brought against a customer.

This article will focus on the elements you will have to prove to be successful in a commercial disparagement lawsuit as well as the difference between defamation and commercial disparagement.

The Elements of Commercial Disparagement

In order to prevail on a claim for business disparagement, a plaintiff must prove the following elements:

  1. The false statement is published;
  2. With the intent, or reasonable belief, that the statement will cause financial loss for the business;
  3. There is in fact a financial loss for the business; and
  4. The defendant makes the statement knowing that it's false or with reckless disregard of whether the statement is true or false.

It's important to break down some of the elements a little further to better understand this type of tort. In this context, "published" simply means that it is communicated -- in writing or orally -- to a third party. In addition, the statement must be false. If the statement is damaging but true, the defendant has an absolute defense to a business disparagement lawsuit.

But proving financial harm from an act of commercial disparagement is often very difficult, since the damage to one's reputation is abstract in nature. In other words, the plaintiff has to prove that the alleged act of disparagement actually caused customers to abandon the company or discouraged the acquisition of new customers.

Defamation vs. Commercial Disparagement

Although defamation and commercial disparagement are very similar, it's important to remember that they are separate torts. First, let's define defamation. Defamation occurs when a person makes an untrue statement, which is published, and causes injury to the person referenced by the statement. Examples of defamatory statements include:

  • Statements that reflect negatively on a person's integrity, morality, or character
  • Statements that suggest that a person was involved in a serious crime
  • Statements that suggest that a person has a mental or physical defect that would discourage others from associating with him or her

Commercial disparagement is a type of tort that is exclusive to businesses, while a defamation claim can be filed by anyone. In addition, a commercial disparagement claim is seen more as protecting the property rights of a business as opposed to its reputation. This distinction is the reason why a claim of business disparagement is meant to protect a business's financial interests, while a defamation claim is meant to more generally protect reputation.

Getting Legal Help

If you believe your organization has suffered from commercial disparagement, or are on the other side of a lawsuit, you may want to contact a local business and commercial attorney to discuss your options.

You can visit FindLaw's section on Business Torts for more information and resources related to this topic.

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