A contract is a binding agreement among parties to do or refrain from doing something. If a third party interferes with that relationship and disrupts how the contract is fulfilled, there may be grounds for a tortious interference with contract claim. That would be filed by a party to the contract who suffered harm as a corporate litigation lawyer can explain.
What Is Tortious Interference With Contract?
This is based on state law, so what it is and how it’s proven may vary from state to state as our friends at Focus Law LA will share. Generally, it’s a legal claim due to the intentional disruption of a contractual relationship. A third party improperly and intentionally induces one party to breach or interfere with an enforceable contract, causing harm to a party involved.
How Is Tortious Interference With Contract Proven?
A court will assess the purpose and nature of the interference and determine if it’s legitimate competitive behavior or wrongful acts illegally undermining contractual commitments. The case elements a plaintiff must prove include:
- A valid contract is involved: There was an offer, acceptance, consideration exchanged between the parties, and mutual intent to comply with the terms. You can’t tortiously interfere with a contract if no contract was formed
- The defendant knew about the contract: They must have actual or constructive knowledge. Without knowledge, there could be no intent to interfere with the contract
- The defendant interfered with it: This can be done directly or indirectly or through competitive interference. If direct, there were open actions to disrupt the relationship. The defendant persuades one of the parties to violate the contract, with or without some kind of inducement like money or a job offer. There can also be threats or coercion. Indirect interference involves a third party creating obstacles to completing the contract or providing false information. This changes behavior that impacts the contractual relationship. Competitive interference may involve actions disrupting business relationships through unethical or illegal competitive tactics
- The interference was intentional: Intent can be viewed objectively and subjectively. Subjective intent covers the defendant’s state of mind, motivations, and whether the purpose of their actions was to interfere with the contract. Objective intent is judged on the defendant’s actions and the circumstances of the defendant’s behavior. Would a reasonable person in this situation foresee their actions could cause contractual interference?
- The means of interference were improper: They can include coercion, deceit, defamation, or economic duress
- The plaintiff suffered legally recognized financial harm that could result in compensation. There could also be punitive damages to punish the defendant’s outrageous behavior
A plaintiff needs credible, convincing evidence covering many issues to succeed.
What Could A Plaintiff Gain From A Successful Case?
The main goal of remedies is to put the plaintiff, the injured party, to the position they would’ve been in if the interference had not occurred. This covers financial losses like reduced profits, costs due to the contract’s breach, and other economic harms caused by the interference. Punitive damages may be available when the defendant’s conduct is especially egregious or malicious.
Damages would be determined based on the contractual relationship and the circumstances of the interference. This could be done through testimony and documentary evidence by the plaintiff, plus the testimony of an outside expert witness. The plaintiff must establish a direct link between the defendant’s conduct and the financial harm the plaintiff suffered.
If you think someone interfered with your contract with another party or you’re accused of such interference, contact your lawyer to discuss the situation.