Libel or Business Disparagement Laws

Heard often in legal/courtroom dramas, business owners will boldly yell at someone that he or she will be sued for libel. Sure, it adds drama, but what does libel really mean? Within the context of commercial settings, business disparagement refers to false and malicious statements made by someone so that a business suffers some sort of financial harm. This form of disparagement falls under privacy law. A common example is a false review made by someone so that a business has a decrease in sales or loses its customers.

There are specific elements that must be proven in order for a claim to be considered business disparagement. A claim of disparagement can be brought against an individual or another company and must have been published (and not just said privately to the plaintiff). The necessary elements are as follows: the published statement must be false, negatively regard the financial reputation (or quality) of the company, have the malicious intent to cause financial loss, and result in a loss to the company.

Business disparagement can apply to the financial reputation or quality of the products and services rendered by a company. The plaintiff must show that the disparaging statement directly caused the loss of sales and/or customers. Many questions arise with the new age of social media, since users on different platforms can easily make disparaging statements. While it gets more difficult in such cases, the same elements still apply and as such both companies and social media users are still adequately protected. However, if false allegations of business disparagement do occur, defendants (with the help of experienced lawyers) can argue against such claims. The lawyer must argue that at least one of the aforementioned elements has not been proven by the plaintiff.

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