What is disparagement?
Disparagement in general refers to false and damaging statements made by one party about another in the business sector. Such statements are usually intended to discourage customers or clients from purchasing from or interacting with a company. However, hurtful comparisons with a thing or person of inferior quality can also constitute disparagement.
In order for the injured party to prove disparagement in court there are a few requirements:
- The false statement has to be made publicly.
- It has to be intended or reasonably believed that the statement would cause the injured party financial loss.
- There has to be actual financial loss.
- The statement is either known to be false to the defendant or made with disregard as to whether it is true or not.
Disparagement vs. Defamation
While both look very similar in principle, defamation regards false and damaging statements about an individual as a private person being made by someone else. This can damage a person’s reputation, social standing and furthermore potentially hurt their chances of finding employment, if a potential future employer learns of these claims.
Disparagement, on the other hand specifically refers to business entities. It is important to note that while single person businesses exist (freelancers, for example) it is still only defamation if the statements do not target person’s business dealings.
Example: someone publicly calls out another person as an alcoholic which leads to a damaged reputation. This is defamation. Now, if someone publicly and wrongly claims that a company’s drink contains poison ingredients and this leads to a loss of customers, the injured company can sue on the basis of disparagement.
Disparagement of goods vs. disparagement of title
Disparagement of goods refers to false and potentially damaging statements about a business entity’s goods or services, as seen in the example mentioned above.
Disparagement of title concerns cases when a false statement is made that casts doubts on the injured party’s title to real or personal property.