What is Tortious Interference with a Contractual Relationship?

Within the field of Business Law, tortious interference occurs when a third party disrupts an existing business contract between two parties. The third party could be held liable for interfering and causing one or both parties to suffer damages as a result of the interference. In order for a party to prevail in a claim against a third party, certain elements must be present. The plaintiff must prove the following:

  • A valid contract existed,
  • The defendant (third party) knew about the contract,
  • The defendant acted intentionally and improperly, and
  • The plaintiff was injured (suffered damages) as a result of the defendant’s actions

Why is this a claim? The idea is to protect contractual business relationships in such a way that businesses have confidence in their dealings.

If intent is part of the essential elements, does the plaintiff have to prove the defendant acted with malice? No. The defendant need not act with ill-will, only that his actions were intentional and for the purpose of interfering with the contractual relationship existing between the plaintiff and a third party.

What Types of Damages?

The typical result of a tortious interference with a contractual relationship is one of breach of contract. The subsequent damages could be quite varied depending upon the case. Two types of damages could be considered: compensatory and punitive.

Compensatory Damages
These are monetary damages and must be exact amounts. The compensatory damages could be calculable for the following damages:

  • Expenses
  • Lost profits
  • Costs of partially completed projects
  • Contracts awarded, but no work performed
  • Promised future contracts
  • Permanent destruction of the business relationship
  • Damage to reputation

Punitive Damages
In the event the plaintiff can prove the defendant acted in a way that is particularly repugnant, the plaintiff may be able to recover punitive damages. For an award of punitive damages, the plaintiff will need to prove malice intent, reckless disregard, or negligence.

What if no Contract Existed?

If there was no contract, but there was an expectancy for a business contract to develop, then a claim may be possible. In this scenario, a potential and anticipated business dealing must be reasonably certain to materialize into a business relationship. This is more than a mere hope for a business opportunity to exist. Instead, the plaintiff must have something concrete showing the relationship was moving towards a business relationship. Where a plaintiff has not provided more than a mere allegation, many courts will dismiss the claim.

In cases involving expectancy, the plaintiff has the additional element of proving the interference occurred through improper means or methods. The meaning of “improper means and methods” is broad and consulting with an attorney to determine if this element is met, is best.

Does Your Business Dispute Qualify?

Not every dispute that occurs in business or commercial transactions qualifies as a tortious interference with a contractual relationship. Certainly, not even all disputes between competitors can be turned into a claim of business tort. High standards are in place for claims that are undeveloped business relationships to prevent abuse of the system. While courts balance the sanctity of proven, contractual business relationships, they must steer clear of petty claims.

Hopefully the information provided here will be of some help in determining if your case is a possible business tort claim. If you require further assistance in making that determination and need to discover the next steps, please call Business Attorney Johnnie Bond to schedule your appointment. Call today at (202) 683-6803 to speak with a team member, schedule a free consultation, and discuss your concerns with people who can help you.

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