Civil conspiracy
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A civil conspiracy is a form of conspiracy involving an agreement between two or more parties to deprive a third party of legal rights or deceive a third party to obtain an illegal objective.[1] A form of collusion, a conspiracy may also refer to a group of people who make an agreement to form a partnership in which each member becomes the agent or partner of every other member and engage in planning or agreeing to commit some act. It is not necessary that the conspirators be involved in all stages of planning or be aware of all details. Any voluntary agreement and some overt act by one conspirator in furtherance of the plan are the main elements necessary to prove a conspiracy.
A conspiracy may exist whether legal means are used to accomplish illegal results, or illegal means used to accomplish something legal.[2] "Even when no crime is involved, a civil action for conspiracy may be brought by the persons who were damaged."[1]
In
In United States business litigation
Business litigation often involves the use of conspiracy
Civil conspiracy law often takes the form of
Conspiracies in violation of the federal securities laws such as the
"Plain Language" jury instructions
Often the modern civil law of conspiracy is described in "plain language" jury instructions. The standard
An example of some of the "plain language" California civil instructions on the essential factual elements of conspiracy reads as follows (with fictional names placed in the blanks in the jury instruction form):
A conspiracy is an agreement between two or more persons to commit a wrongful act.
Such an agreement may be made orally or in writing or implied by the conduct of the parties.
Plaintiff Smith, Inc., claims that it was harmed by Defendant Jones Corp. for refusing to sell widgets to Plaintiff Smith, Inc. with intent to unreasonably injure competition and that Defendant Brown & Associates is also liable for the harm because it was part of the conspiracy with Jones Corp. to unreasonably injure competition under the California antitrust laws.
The facts of each case can vary widely as to exact nature of the underlying scheme. In the above example, a common fact pattern could be that widgets are necessary for Smith, Inc. to manufacture its product, and Brown & Associates is a competitor of Smith, Inc.
How the conspirators entice one another into the scheme also varies. In the above example Brown & Associates could promise Jones, Corp. kickbacks from the additional profits it hopes to make if Smith, Inc is forced out of business because it lacks the necessary widgets, or Jones Corp could entice Brown into a conspiracy with the prospect of increased profits, to be shared with Jones for withholding widgets from Smith.
In English law
The
- as a matter of agency law, the acts and omissions constituting the alleged conspiracy must have been carried out within the actual or ostensible authority of the agent; or
- as a matter of vicarious liability the acts and omissions must have been carried out in and during the course of the employment.
There is little difficulty when the claim is that the company either conspired with a second company or with at least two natural persons. The requisite knowledge can be attributed under either head as appropriate. But there is a problem under the first heading when fraud is involved because there is a clash of authority. Lloyd v Grace, Smith & Co [1912] AC 716 held that a Principal may be liable where the Agent commits a fraud within actual or apparent authority, whereas in In re Hampshire Land Company [1896] 2 Ch 743, it was held that the knowledge and, sometimes, the conduct of an Agent acting fraudulently so as to cause loss to the Principal will not be imputed to the Principal. In theory, vicarious liability may be of more assistance in that it is attributing the wrong done by one (natural) person to another (fictitious) but, in Belmont Finance Corporation v Williams Furniture Ltd [1979] Ch 250, the Hampshire Land agency line of authority was preferred. Belmont, a company in liquidation, sued a number of defendants, including the majority of its own directors, for conspiracy to procure Belmont to buy shares in another company at a gross overvalue. The purpose of this plan was to fund the acquisition of shares in Belmont itself by some of the defendants. Foster J. struck out the claim on the basis that Belmont was itself a party to the conspiracy. On appeal, Buckley LJ. said:
- But in my view knowledge should not be imputed to the company, for the essence of the arrangements was to deprive the company improperly of a large part of its assets. As I have said, the company was a victim of the conspiracy. I think it would be irrational to treat the directors, who were allegedly parties to the conspiracy, notionally as having transmitted this knowledge to the company.
Because Belmont could only be a party to the conspiracy if knowledge was imputed, the
See also
- Conspiracy (crime)
- Conspiracy (disambiguation)
- Hub-and-spoke conspiracy
References
- ^ a b Encarta: Conspiracy Archived 2008-01-09 at the Wayback Machine. 2009-10-31.
- ^ Conspiracy Law & Legal Definition
- Department of Trade & Industry: "Company Law Review: Attribution of Liability"
- U.S. Department of Justice: "Antitrust Enforcement and the Consumer"