Small Business Law

Business Torts Arizona Entities Neeed to Be Aware of in 2024 - Gottlieb Law

5 Business Torts Arizona Entities Need to be Aware of in 2024

5 Business Torts Arizona Entities Need to be Aware of in 2024 2475 1650 Gottlieb Law

Business torts, commonly referred to as an “economic tort” are the result of a civil wrong that causes a business to suffer some form of economic harm. For example, these torts can result from a variety of actions such as fraud, defamation, breach of contract, and more.

Understanding Business Torts

In the simplest of terms, a business tort is representative of any interference that involves the business rights of another entity. These rights could range from trade secrets and proprietary information to established client relationships. It’s crucial for businesses to comprehend these torts, as the consequences can be detrimental, leading to substantial financial losses and damage to reputation.

It is a civil wrong, quite distinct from a criminal act, that leads to legal liability for the individual or entity that perpetrates the misconduct. Unlike ordinary torts that typically result in physical harm or damage to property, business torts are primarily concerned with economic damage or loss of business opportunities.

The Scope and Impact of Business Torts

Business torts encompass a wide range of wrongful acts, from fraudulent activities and misrepresentation to intellectual property infringement and unfair competition. The impact of these torts can be profound, potentially leading to substantial financial losses, harm to the business’s reputation, and in some cases, even the collapse of the business itself.

Navigating Business Tort Lawsuits

Business tort lawsuits can be complex, often involving intricate legal arguments and substantial sums of money. It is crucial for businesses to have competent legal representation to navigate these lawsuits effectively. An experienced business tort attorney can help identify potential claims, gather necessary evidence, and represent the business’s interests in court.

The Crucial Five: Key Business Torts in Arizona

1. Fraudulent Misrepresentation

Fraudulent misrepresentation is a serious business tort that involves the intentional provision of false information with the purpose of deceiving or misleading another party. This can range from exaggeration of a product’s capabilities to falsifying financial records or other critical information. It’s critical for businesses to maintain transparency and honesty in all their dealings to avoid allegations of fraudulent misrepresentation.

2. Business Defamation, Commercial Disparagement & Trade Libel

Defamation of a business can take place in a number of ways, the most common being found in publicly released statements that can cause potential harm to the reputation of a business. This could be through slander (spoken defamation) or libel (written defamation). Commercial disparagement, on the other hand, involves false statements that discredit a business’s products or services. Trade libel is a subcategory of this, involving the dissemination of false information about a business’s goods or services. Businesses must be cautious about what they communicate publicly to avoid these torts.

3. Invasion of Privacy

Invasion of privacy is an issue that has taken center stage in the modern, digital era. Invasion of privacy could occur in various ways, from unauthorized data collection to the unwarranted public disclosure of private information. To prevent this, forward-thinking businesses need to ensure that they have a state-of-the-art data protection model and that they are in full compliance with any laws as they may relate to regulations of privacy.

4. Breach of Fiduciary Duty

Business members, such as executives, are mandated to act in the best interest of each and the company, or they may be at fault for breach of fiduciary duty. In a business context, this could apply to situations where a company’s board member or executive acts in personal interest to the detriment of the company. What’s more, a significant breach of fiduciary duty can lead to legal action that results in the tarnishing of the reputation of the business.

5. Tortious Interference with Contracts and Potential Business Relations

This type of a business tort is the result of a third party that interferes with and or disrupts a business and its contractual obligations. This could be through inducing a breach of contract or preventing a potential business relationship from materializing. Ensuring fair competition and respect for existing business relationships is crucial to avoid this tort.

The Future of Business Torts

With the ever-evolving business landscape, especially in the digital age, new types of business torts are likely to emerge. Issues around data privacy, online defamation, and cybercrime could potentially give rise to new kinds of business tort disputes.

Final Thoughts

These five business torts represent potential risks that Arizona entities should be watchful of in 2024. By understanding these torts, businesses can better safeguard their interests and maintain their integrity in the marketplace. It is recommended that businesses seek legal counsel to ensure they have the appropriate measures in place to prevent such torts and to handle any allegations that may arise.

The world of business torts is complex and ever-evolving. Staying informed about these legal matters, especially in the dynamic context of 2024, is not just important—it’s essential for the success and longevity of any business.

Consult an Experienced Arizona Business Tort Attorney

Gottlieb Law was founded to provide the best representation for all your real business legal needs. Our experienced lawyers can assist with all types of business torts including disputes and litigation. Speak to our firm today by calling 602-899-8188 or schedule an initial consultation by submitting your information on our contact us page.


Gottlieb Law - Avoid Common Legal Mistakes as an Arizona Small Business

Make Sure to Avoid These Regular Legal Mistakes Made by Small Business Owners in Arizona

Make Sure to Avoid These Regular Legal Mistakes Made by Small Business Owners in Arizona 1773 1182 Gottlieb Law

Nobody wants legal trouble, but it’s an unfortunate reality for small business owners in Arizona who neglect crucial protections for their business. Whether entrepreneurs are juggling too many responsibilities or simply feel they cannot afford a lawyer, plenty of them learn too late that taking a casual approach to legal matters leaves one’s business vulnerable. The good news, however, is that research and preparation can help business owners evade common legal missteps. It’s impossible to forecast every possible legal risk, especially considering the nuances of different industries, but these are regular legal mistakes to avoid.

Improper or Unwise Business Setup

One of the most important decisions you will make early on in your entrepreneurship journey is how you set up your business. Sole proprietorship and general partnership structures are legally sound, but it’s wise to establish limited liability through an LLC, corporation or even a limited liability partnership. Otherwise, in the event of a lawsuit or other issue, not only are your investments in the company and the company assets at risk, but so are your personal assets. Failing to legally separate and protect your personal assets from those of your company can be a costly, irreversible mistake.   

Ownership structure also affects investor relationships and the potential to sell the business. Most outside investors look for the stock structure of a corporation, but small businesses may choose to establish an LLC instead because of the demands of maintaining corporate records. Consider the tax implications, investment opportunities and whether you intend to sell your operation before filing setup paperwork. 

Poor Record Keeping and Document Organization

Every business is required to maintain documentation on cash flow, tax history, human resources, employees, insurance and much more, which is no small feat — especially for entrepreneurs who are unfamiliar with record keeping best practices. However, there are substantial monetary penalties for businesses that fail to keep up these records — and the impacts can be felt years down the road. A violation may even disqualify the owner from certain business loans, causing the entire operation to fold. 

Small business owners in Arizona should become familiar with the documentation required for their chosen organizational structure. Corporations, for example, have specific records that must be maintained and do not apply to other types of businesses. From the time you establish your business, keep all of your documents (and keep them organized) so you can protect yourself and avoid the dissolution of your business. 

Employee Issues

It’s exciting to see your business grow enough to need staff, and stellar employees can amplify that growth even further. But before bringing anyone on board, be sure to do your due diligence on local, state and federal employment regulations. Resolving workplace legal issues can be a costly endeavor.

The first mistake in this category is not setting expectations upon hiring employees. Arizona is an “at-will” state, meaning either an employee or employer can dissolve the employment agreement at any time. In other words, absent a contractual agreement to the contrary, workers are not bound to one company and can leave whenever they want, while companies can fire employees at any time without reason. Employees of your small business in Arizona will likely already know they have employment-at-will status, but they should still acknowledge it formally during onboarding. Additionally, they should sign paperwork containing your business’ conduct policies, especially those around harassment and discrimination. Arizona courts often treat employee handbooks as enforceable contracts, so take special care when writing them.

Small business owners also run into trouble when they improperly treat W-2 employees like independent contractors. Fortunately, the IRS provides detailed information about classifying workers as self-employed, independent contractors or simply employees. Arizona also passed a new Declaration of Independent Business Status law (A.R.S. § 23-1601) that allows employers to have their independent contractors declare their status and verify they meet the requirements.

Finding Themselves in Court 

Running a small business in Arizona is incredibly demanding. You likely wear many hats in the effort to keep the operation running smoothly, and there is a major investment of your time, money and resources. Therefore, your business cannot afford to find itself in court. Litigation is oftentimes a lengthy process, and legal fees can mount quickly. 

The best way to stay out of legal trouble is to take the time and money to establish protections and set up your business to avoid these regular legal mistakes. Consulting with experienced attorneys may seem expensive up front, but think of it as a long-term investment in your small business’ success.  The attorneys at Gottlieb Law can help small business owners in Arizona get their company setup correctly and proactively avoid most common legal mistakes.  Contact us today at 602-899-8188 or schedule an appointment on our contact us page