What is defamation?
Defamation is the umbrella term for libel and slander and is based around reputation – and specifically relates to statements that damage the reputation of others.
A person is said to be defamed when someone else publishes words or matter which have caused, or are likely to cause, substantial harm to a person's reputation. The use of the word "published", however, does not mean that the statement has to be in print form.
Whilst there is no single, succinct test of what could count as causing harm to someone's reputation, various suggestions have been made in the courts, including any material which:
- Discredits a person
- Lowers others' estimations of them
- Causes them to be avoided or shunned
- Causes them to be exposed to ridicule, contempt or hatred.
In January 2014, the Defamation Act 2013 came into force, which introduced the requirement that the reputational harm needed to be "serious". Further, where the claimant is a company, it will also need to show "serious financial loss". This has created some uncertainty as to how these new requirements will be applied by the courts. There are various defences which could be available (such as the fact that the statement was true, or if the author was under a special duty to make the statement).
What are libel and slander?
Libel and slander are both forms of defamation. The most basic difference between them is that slander is concerned only with statements published in a temporary or transient form (which usually means statements which have been spoken), but libel covers all published statements.
The victim of slander has to prove they have lost money as a result of the slander. However, with libel, it is not necessary to prove a loss (if the victim is not a company). Therefore, it is possible for a victim of libel to sue somebody for a written insult even if it did not cause them to lose any money.
Whilst the distinction seems simple, there are complications and grey areas when trying to define the two, mainly concerned with the rapid growth of modern technology and social networking. UK courts have taken the view that some web communications are more akin to speech than traditional print, and as a result, slander sometimes applies to such communications.
How does professional indemnity insurance protect your business against defamation?
No matter how large or small a business is, it runs the risk of being sued for libel or slander if unfounded assertions are made against a third party. There are many examples of libel and slander claims within business situations, such as:
- A fitness instructor may criticise another trainer - saying they are incompetent at their job - and the trainer loses business as a result
- A management consultant says to someone that a business has been participating in illegal or unethical activities
- A freelance web designer sends an email to a potential client in which they make unfounded allegations of the quality of a competitor's work, which causes the competitor to lose a contract
- An event organiser becomes aware that a venue they regularly use is about to become insolvent, and warns its staff to refrain from making any bookings there. This causes the venue to lose both current and potential bookings.
- A salesman promotes his company's services by making derogatory comments about a competitor.
Regardless of the activities your business undertakes, it could be destroyed by legal costs and fines as a result of a defamation case. Professional indemnity insurance can cover the legal fees in defending your business against a defamation claim, as well as compensation payments to the claimant. Find out more about PI insurance and what it can cover against.