Operating a small business is tough work. Sometimes, it seems as though your competitors are out to get you. But what if they are? What happens if you learn that your competitors have intentionally taken customers or your vendors away from you?
Letting the market decide is an old economic policy; most of the time, it works. However, pushing the market by interfering with the competition's business contracts or contractual relations is a basis for legal action. It's called tortious interference and is a cause of action in court. This article explains what that is and how you can fight it.
What is Tortious Interference?
The Third Restatement of Torts codifies common law that handles contract disputes. The Third Restatement covers two types of tortious interference, depending on the defendant's conduct and the kind of relationship they attack.
- Wrongful interference in a contract means disrupting a contractual relationship. For instance, a business contracts with a delivery company to ship goods. If the defendant tried to induce the delivery company to breach the contract, it would be tortious interference with the contract.
- Wrongful interference in a business relationship occurs when there is no contract. The defendant attempts to disrupt the relationship, causing economic harm. If the defendant defames the business owner's product, resulting in loss of business, that is tortious interference in the business.
Interfering in a business is not a tort action by itself. To prove the tort, the plaintiff must prove other factors.
Proving Tortious Interference
Tortious interference is an intentional tort. This means that the defendant must have acted with knowledge of the relationship when they interfered with the contract or relationship. Businesses may undersell, lure away vendors, and carry out other business strategies. The plaintiff must prove other elements to have a claim.
Existence of a Valid Contract or Economic Expectation
The plaintiff must show that a valid contract or reasonable economic expectation existed between the plaintiff and a third party. Many tortious interference cases involve a breach of contract by a third party with whom the plaintiff had an existing agreement. Proving interference is easiest in these cases if the contracting party is willing to testify that the defendant wrongfully intervened in that contract.
Knowledge of the Contract or Expectation by the Defendant
For an intentional tort, the defendant must know before acting that the plaintiff and the third party had a contractual relationship. In business litigation, merely disrupting a client relationship is not always wrong. The defendant's interference can also be tortious if they meant to harm the plaintiff for their own prospective economic advantage.
Intent of Defendant to Interfere
The defendant must show an intent to interfere in the plaintiff's business relations. Their acts may have this effect, but that does not mean they intended to cause economic harm. Intentional interference means acting in a way calculated to disrupt the plaintiff's business.
Wrongful Act or Interference
In a tortious interference case, proving that the defendant acted improperly means showing that the defendant did something intentionally wrong. In a contract case, this means showing both interference and a wrongful act. For instance, running ads against the plaintiff's business is not interference, but running ads carrying a misrepresentation of the plaintiff's products as contaminated might be.
The plaintiff must suffer economic loss or prospective business due to the defendant's actions. It is possible to sue for mental distress in some jurisdictions. A plaintiff can recover actual and future profits, punitive damages, and fees and costs.
Making Your Tortious Interference Claim
Proving tortious interference in court is complicated. It is a complex legal issue that requires a great deal of evidence. Your best recourse is to have a business attorney who specializes in tort and contract law. Proving the legal elements of tortious interference takes experience in commercial litigation. Before you file a claim, you need legal advice. Get legal help, and contact an experienced business and commercial lawyer to learn about your options.
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.