Naxon opened a retail computer shop which he called Computer Haven Ltd.He used colours and signs similar to those used by Computerheaven Ltd.,a very successful computer store 5 kilometres away.After Naxon was in business for about five months,the directors of Computerheaven Ltd.noticed that their sales had dropped.On these facts,which of the following is true?
A) Computerheaven has no cause of action against Naxon because ours is a free society and competition in all forms is encouraged by our political and legal system.
B) Computerheaven could successfully sue Naxon for the tort of injurious falsehood.
C) Computerheaven could successfully sue Naxon for the tort of passing off if it can prove that the name, signs, and colours used by Naxon were likely to mislead the public.
D) Computerheaven could successfully sue Naxon for the tort of innuendo.
E) Computerheaven could successfully sue Naxon for breach of contract.

Question

Quizplus · Accepted Answer

Computerheaven could successfully sue Naxon for the tort of passing off if it can prove that the name, signs, and colours used by Naxon were likely to mislead the public. Passing off is a common law tort designed to protect the goodwill and reputation of a trader in his trading activities. The tort of passing off involves a trader misrepresenting or passing off their goods or services as those of another. In this case, Naxon's use of similar signs and colours to Computerheaven could mislead the public into thinking that they are associated with or endorsed by Computerheaven.

Naxon Opened a Retail Computer Shop Which He Called Computer