Torts-Economic

Almost always comes up in contractual transactions, often where trickery is involved in inducing the buyer, etc.

• 1. The D must make a misrepresentation of fact.
• Affirmative Misrepresentation. Silence does not satisfy the tort of fraud (though it may be fraudulent for other civil law purposes). This is the origin of caveat emptor.

• 2. Misrepresentation must be made deliberately or recklessly.
• --D must know he’s lying or have made no effort to ascertain the truth.
• --A mere error by D will not trigger fraud liability.

• 3. The misrepresentation must be intended to induce reliance [material].
• (puffing up car; not your actual expectation this will affect buyer)

4. There must be reliance by P.

• 5. Must be economic damage.
• Must end up overpaying b/c of the fraud.

• Compressed Fraud Elements
• Someone tricked you deliberately, you fell for it, and you got screwed.

New York Only.

• Intentional infliction of pecuniary harm without justification. Sort of a catch-all.
• “Elements:” 1. Must be an intent to do harm; 2. Must be harm.

• --Record company/radio station example.
• --Predatory pricing—selling low to drive out competitors.

1. Must be a contract in existence between P and third-party (T).

• 2. D must have knowledge of the K.
• 3. D must engage in persuasion designed to encourage T to breach the K.
• Most bar questions, the inducement will be a better deal, better collateral, etc.; as opposed to coercion, etc.

• 4. T must then breach the contract.
• Privilege—special/advisory relationship b/t D and a contracting party (parents, professional advisors, clergy).

• P’s Claims:
• --Against T for the actual breach.
• --Against D for inducing the breach.

1. P must possess a valid trade secret.

• Valid trade secret=
• 1. Information that provides a business advantage to the possessor (mfg process);
• 2. Must be secret; and
• 3. Owner must take reasonable steps to keep the information secret.

2. D must take the trade secret by improper means.

There are two alternative “improper means”:

--“traitorous insider.” Improper b/c of breach of trust/implied confidentiality of relationship.

--“industrial spy.” Improper if illegal or legal but violates ordinary standards of commercial morality.