Understanding Tortious Interference With Examples

Tortious interference claims can be initiated in case of wrongful termination of employees. If the supervisor, manager, or colleague of the employee is responsible for the employer's disciplinary action (against the employee), the former can be sued for tortious interference, because it was the wrongful conduct of the defendant that induced the termination.

When it comes to business, competition is almost unavoidable. Unfair competition is a major cause of business litigation, especially those related to tortious interference.

It is the most common type of economic tort, which allows an aggrieved party to claim damages from the defendant for intentional interference with the former's contractual or business relationships.

The concept of tortious interference is believed to have originated from Roman law.

Before the fifteenth century, English courts had recognized this concept and applied it in some cases of interference with contractual relations. Later, the scope of this concept widened, and now intentional interference with business relationships and inheritance are also considered as torts.

Tortious interference is a tort which is defined as follows: "Causing harm by intentionally by (a) disrupting a contractual relationship or (2) harming a business relationship or activity."

As, A and B are into the same business. If B threatens A's customers and persuades them to cancel their deals with the latter, the action of B amounts to tortious interference. A can sue B for damages, as B's action causes loss to the former. When it comes to tortious interference with contracts, it is not necessary that the deals are related to business.

The doctrine of tortious interference is applicable to employee-employer relationships too. This happens, if there exists a non-compete agreement between the employee and his/her previous employer.

(A non-compete agreement is a contract between an employer and an employee, in which the employee promises not to take what he/she learns while working for the employer and use it against while working for a competitor.) The employee is hired by a new employer, who is fully aware of the non-competent agreement between the former and his previous employer.

The new employer and the employee interferes with the non-compete. The previous employer can sue the new employer for tortious interference.

In short, tortious interference is an economic tort, and the aggrieved party can claim damages against the defendant's wrongful actions, which resulted in damage to the contractual and business relations of the former.

Tortious interference can be broadly classified into two types. One is interference with contracts, and the other is interference with business.

In case of contracts, tortious interference is also called unlawful interference with contracts, unlawful interference with contracts, inducement of breach of contract, etc.

Tortious interference can affect a contract in two ways. A third party can wrongfully persuade a party to the contract to rescind the deal; or disrupt the ability of a party to perform his obligations as required by the contract.

For example, A promises to buy B's house for a specific amount. C, who wanted to buy the house for a lesser price, approaches A and persuaded him to cancel the deal for wrong reasons.

A cancels the deal. B, who was planning to purchase another property using the proceeds of the deal, suffers a huge loss. B can sue C for tortious interference. B can claim damages for the loss suffered. In some cases, punitive damages can also be awarded for tortious interference with malicious intentions.

Wrongful interference with business relations, thereby causing economic harm to a party to the relation, is also considered a tort. In this case, a valid contract is not required. If a third party wrongfully interferes in a business relationship with prospective economic advantage, it amounts to tortious interference.

For example, A runs a restaurant.If B accuses A of selling stale food, it will affect his future business. B's accusation can cause economic loss to A, and amounts to tortious interference.

Example 2: A is planning to enter into a contract with B, in order to expand his business. C, who is a competitor, ruins A's plan by spreading false stories about A's business. B backs out of the plan, thereby causing financial loss to A. In this case, A can sue C for tortious interference with business expectancy.

The claim will stand if the contract is terminable, as a termination cannot be induced by another person (as in tortious interference). In case of business relation, there is no need of a valid contract. The plaintiff has to prove that he/she had a business relationship with a third party, and the defendant ruined the relation, causing harm to the plaintiff.

The plaintiff must prove that the defendant had knowledge about the existence of the valid contract/business relationship between the former and a third party. Another factor is the intention of the defendant. He must have an improper or malicious motive, and must interfere purposefully. An attempt to interfere does not amount to tortious interference.

The defendant must have actually interfered with and ruined the relation, thereby causing loss to the plaintiff. He should not be privileged or authorized to induce such a breach of contract.

In short, the plaintiff must prove that the defendant acted maliciously. If the motive of the defendant was legitimate, the claim won't stand.

For example, C and A are business partners. C interfered with the contract between A and B, as the former was aware of B's unethical and illegal practices. A cancels the contract with B. B can sue C for tortious interference, but the claim will not stand as the latter's motive was not improper.

Various factors have to be considered while deciding the motive of the defendant in a tortious interference claim.

So, the interference of the defendant must cause breach of the contract, which resulted in loss to the plaintiff. The plaintiff can sue the defendant for damages. In some cases, other relief like an injunction order, may allowed against the defendant. If malice on the part of the defendant is proved, punitive damages may also be awarded.

Apart from these two types, there is another form of tortious interference ― intentional interference with an expected inheritance. In this case, a claim for damages can be made by a person who loses an inheritance or gift, which he would have received if there was no interference from the part of the defendant.

In order to prove such a claim, the plaintiff must prove that he was about to receive an inheritance. He would have received the same if the defendant had not interfered.

He must also prove that the defendant had knowledge about the inheritance, and the latter interfered intentionally and purposefully. The defendant must have acted with a wrongful or malicious intention, and the act should have caused loss to the plaintiff.

In short, the basic principle of tortious interference remains the same, irrespective of the type. If you find yourself in such a situation, contact an experienced business attorney who can guide you properly.