Injurious falsehood
The tort of making a false statement, with malice, that causes loss to another's trade, goods or property interests
In one minute
Injurious falsehood is a false statement, made with malice, that causes special damage to the claimant's trade, goods or property interests. It protects business interests, not reputation as such.
In exams, this topic is asked as "what is injurious falsehood and how does it differ from defamation", and as a problem on a rival's false claim about goods. The usual trap is forgetting that malice and special damage are both required.
Exam focus
- Frequency: Rarely asked
- Usually asked as: Short answer (4 to 6 marks)
Legal provision
- No Indian Act defines injurious falsehood. It comes from English common law and is applied in India as justice, equity and good conscience.
- Trade Marks Act, 1999, section 29(8): a registered trade mark is infringed by advertising that takes unfair advantage of the mark or harms its reputation. This is a statutory remedy for related harm.
- Consumer Protection Act, 2019: misleading advertisements are penalised by the Central Consumer Protection Authority.
- Specific Relief Act, 1963, sections 36 to 42: injunctions to stop repetition.
Meaning and definition
Injurious falsehood is also called trade libel, malicious falsehood or slander of goods or title. It is the making of a false statement about the claimant's business, goods or property, maliciously, which causes him actual money loss. The statement need not harm his personal reputation. It can even praise him, as in a false announcement that his shop has closed.
Detailed explanation
Step 1: The essentials
- A false statement about the claimant's goods, business or title to property. A true statement gives no claim, however damaging.
- Malice. The defendant knew that it was false, or was reckless whether it was true, or acted from an improper motive. Careless or honest mistakes are not enough.
- Special damage. The claimant must prove actual money loss caused by the statement.
- Publication to a third person.
Step 2: Forms
- Slander of goods: a disparaging false claim that the claimant's goods are defective, or that they are the goods of another.
- Slander of title: a false claim that the claimant does not own his property or has no right to sell it.
- False claims about the business: that it has closed, is bankrupt or has changed hands.
Step 3: Proof of special damage
In Ratcliffe v. Evans, a newspaper falsely published that a firm was extinct. The firm proved a general decline in business, but could not name a lost customer. The Court of Appeal held that general evidence of loss of business is admissible and enough where the falsehood is calculated to cause, and does cause, a general loss of trade. The £120 verdict stood.
Step 4: Comparison with puffing
- A trader may praise his own goods, even in exaggerated terms. This is "puffing" and is not actionable.
- A false statement of fact that disparages a competitor's goods is actionable if the other essentials are met.
- Honest comparison of goods is lawful.
Step 5: Defences
- Truth of the statement.
- No malice: an honest belief, or an honest mistake.
- Privilege, for example a statement made in a court case or in the course of a duty.
- Consent of the claimant.
- No special damage.
Step 6: Remedies
- Damages for the loss of trade.
- An injunction to stop repetition, and an interim injunction until the trial. The test in American Cyanamid Co. v. Ethicon Ltd is a serious question to be tried, then the adequacy of damages and the balance of convenience.
- Correction or retraction.
- 1. A false statement about the claimant's trade, goods or propertyIf this is missing, there is no claim.
- 2. Published to a third personIf this is missing, there is no claim.
- 3. Made with maliceIf this is missing, there is no claim.
- 4. Special damage provedIf this is missing, there is no claim.
- 5. ResultInjurious falsehood
Don't confuse: injurious falsehood and defamation
| Point | Injurious falsehood | Defamation |
|---|---|---|
| Protects | Trade, goods, property | Reputation |
| Statement must be | False | False and defamatory |
| Malice | Essential | Not essential |
| Damage | Special damage | Libel: not needed |
Injurious falsehood. A rival of a cycle shop in Kadapa tells customers, knowing it is untrue, that the shop has shut. Orders fall. This is injurious falsehood.
Puffing, not a tort. A tea seller in Vizag calls his tea the best in the town. This is exaggerated praise of his own goods and is not actionable.
Common mistakes
- Calling it defamation. The statement need not hurt personal reputation.
- Forgetting malice. A careless statement is not enough.
- Forgetting special damage. It must be proved.
- Treating puffing as injurious falsehood.
- Thinking that the claimant must name each lost customer. General loss of trade can be proved.
Apply it
Problem
A trader in Nizamabad tells the buyers of a competing fertiliser dealer that the dealer's stock is adulterated. He knows that the stock is genuine. Sales of the dealer fall by half over two months.
Question. Can the dealer sue?
Rule. Injurious falsehood needs a false statement about the claimant's goods, malice and special damage.
Application. The statement was false and was known to be false, so there was malice. Sales fell, which is damage. Under Ratcliffe v. Evans, a general fall in business is enough.
Conclusion. The dealer can sue and claim damages and an injunction.
Leading case laws
- Ratcliffe v. Evans (1892)
Facts. The County Herald falsely published that the firm Ratcliffe and Sons was extinct. The plaintiff proved a general loss of business but no particular lost customer or order.
Principle. General evidence of loss of business is admissible and sufficient.
Significance. Leading case on special damage in injurious falsehood.
- American Cyanamid Co. v. Ethicon Ltd (1975)
Facts. A patent holder asked for an interim injunction against a rival before the trial.
Principle. The court asks whether there is a serious question to be tried, then looks at the adequacy of damages and the balance of convenience.
Significance. The test for interim injunctions in trade disputes.
How to write this answer in the exam
5-mark answer
- Define injurious falsehood.
- State the essentials: false statement, malice, special damage.
- Cite Ratcliffe v. Evans.
- Distinguish defamation.
10-mark answer
- Meaning and names of the tort.
- Essentials.
- Forms: goods and title.
- Special damage and Ratcliffe v. Evans.
- Puffing and defences.
- Remedies.
- Comparison with defamation.
Key points to remember
- Injurious falsehood: false statement, malice, special damage.
- It protects trade, goods and property, not reputation as such.
- General loss of trade is proof of special damage (Ratcliffe v. Evans).
- Puffing is not actionable.
- Remedies: damages, injunction.
Quick self-test
1. What mental element does injurious falsehood need?
Malice.
2. Must the claimant name each lost customer?
No. Evidence of a general loss of business is enough (Ratcliffe v. Evans).
3. Is puffing actionable?
No. Exaggerated praise of one's own goods is not a tort.