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Movies often portray business leaders in a less than favorable light, showing dastardly businessmen and women engaging in less than honorable behavior toward partners, customers, and rivals under the auspices of “it’s not personal, it’s business.” In reality, however, the business world often involves projects that involve complex transactions and may actually blend personal and business relationships in order to reach a deal. What the motion picture industry also seems to gloss over are the thousands of rules and regulations governing business transactions within the State of California and beyond. Business owners should review their rights and responsibilities pursuant to these laws, rather than listen to Hollywood, especially with regard to their duties under California’s Unfair Competition Law.

The Law

According California law, no company may engage in behavior that is considered to be unfair competition. Unfair competition, as it would violate the statute includes “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1…of Part 3 of Division 7 of the Business and Professions Code.”  That definition does not provide much guidance for business people as it relates to unfair behavior, and so it has been left up to the courts to interpret the statute and derive its meaning.

Essentially, California courts have had some difficulty providing the public with an exact definition that would clearly show the boundaries of what is and is not “unfair” under the law.  Typically, the courts have focused their review of business practices on those actions that “have a tendency to deceive the public.” While far from perfect, this guidance allows the business community to have a compass that should be used to guide them when engaging in day to day business activities. If a business leader considers “whether this would be deceptive to a member of the public” before making a decision, it should help that leader steer the company in a lawful direction. The other prongs of the definition – unlawful or fraudulent – are easier to define.  Specifically, unlawful behavior would be any action that would violate a statute, rule or regulation and fraudulent behavior would include the misrepresentation of information, which is then relied upon by a reasonable person who is then damaged because of that reliance.

Damages 

Violations of the Unfair Competition Law in California may not provide the greatest windfall to a person, as compared to other statutes, but its remedies allow for a person to be made whole.  Essentially, if a court finds that a company violated the law, it may order it to immediately cease and desist from engaging in the unfair practice and refund any money paid to the company by those who were harmed. While this may not seem like much, the statute is designed to prevent unfair practices from allowing a company to obtain an edge on their competition by unlawful means. The remedies provide a mechanism for the leveling of the playing field when it comes to competition in the marketplace, as well as a refund for those directly harmed by the practice.

Questions? 

If you are a leader who has questions about California’s Unfair Competition Law, call the attorneys at Garcia & Gurney today. Our team is skilled in all areas of the law affecting California businesses and can help your company stay on the path to success by avoiding the pitfalls of litigation.

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