WHAT IS Misfeasance
Misfeasance is the act of engaging in a proper action or duty, but failing to perform the duty correctly. Misfeasance refers to performance within a contract and often occurs in the business world when management does not comply with rules and procedures. Typically an act of misfeasance isn’t done out of intent to harm but more likely to create a shortcut. Management may do this believing the action will help the company even though it could result in negative consequences in the future.
BREAKING DOWN Misfeasance
Misfeasance refers to a perpetrator purposefully not fulfilling the duties of their contract, but it more often occurs when the negligence is done unknowingly. An example of misfeasance could include a public official hiring his or her sister without realizing that it would be against the law to hire a family member. Another example of misfeasance would be if a catering company is contracted to provide both food and drinks for a wedding, yet only providers drinks and forgets the food, which was already paid for.
In theory, misfeasance differs from nonfeasance, which refers to a failure to act that results in harm to another party. Misfeasance, by contrast, describes some affirmative act that, though legal, causes harm. In practice, the distinction is confusing, and courts often have difficulty determining whether harm resulted from a failure to act or from an act that was improperly performed.
Misfeasance vs. Malfeasance
In contrast to misfeasance, which is generally an unintentional breach of contract, malfeasance refers to a willful and intentional action that injures a party.
For example, consider again a catering company at a wedding. If the company unintentionally fails to uphold a part of the contract, that action would be considered misfeasance, but say the company accepts a bribe from one of its client’s competitors to undercook the meat, therefore giving the guests food poisoning. That action is considered malfeasance because it intentionally causes harm.
A party that incurs damages by malfeasance is entitled to settlement through a civil lawsuit, but proving malfeasance in a court of law is often difficult.
Corporate malfeasance describes major and minor crimes committed by management of a company. Such crimes may involve committing intentional acts that harm the corporation or failure to perform duties and adhere to related laws. Corporate malfeasance can result in serious problems within an industry or a country’s economy. As corporate malfeasance increases, governments pass more laws and take more preventative measures to minimize the amount of malfeasance taking place globally.