Tortious Interference: Everything You Need to Know
Tortious interference occurs when a business tries to economically harm a competitor by interfering with a contract or relationship. 5 min read updated on February 01, 2023
Updated November 12, 2020:
What Is Tortious Interference?
Tortious interference occurs when a business tries to economically harm a competitor by interfering with a contract or relationship. Breach of contract is the most common cause of interference. However, it is not the only form.
Interference often leads to economic damage. For example, the interference could involve the sale of a business. It could also happen if a vendor offers a business unreasonably low prices, causing the buyer to breach a contract with another vendor. Interference must be intentional to result in a legal suit.
Basics of Interference
The defendant in one of these cases is the person who interfered with the contract. Interference can happen in many ways, including:
- Unethical business practices
There are two types of victims in an interference case. The first is the entity damaged by the broken contract. The second is the person who is forced into breaking the contract. Either party can bring a lawsuit.
Interference cases are extremely complicated. To be eligible for a lawsuit, there are certain elements that must be present in your situation. These include:
- A legal contract or financial relationship
- The defendant knows about the contract or relationship.
- The defendant's goal was to interfere with the contract or relationship.
- Actual interference occurred.
- The interference is inappropriate.
- The victims suffered damage.
Cases missing one of these issues usually do not make it to court.
Contract or Relationship
Interference claims require that the victims are involved in a legal contract or have a business relationship. However, these ties must have been valid. Relationships that were never legalized are not valid so they aren't the basis for an interference claim. If a relationship violates public law, it is not a valid basis for an interference claim.
Some cases involve at-will contracts. This adds complications. Even though a contract can be dissolved at will, interference can still occur. This is especially true if the defendant knew about the contract.
A successful claim depends on proving the defendant knew about the relationship. This is usually shown in written statements or proven through the actions of the defendant. If the defendant can prove they didn't know about the relationship, interference cannot have occurred.
It's possible the defendant did not believe the relationship was valid, which led them to believe they were not interfering. However, legally speaking, they may still have interfered.
Goal to Interfere
Intent is key in interference cases. The intent of the defendant must be proven to win these claims. This means they either intentionally interfered or they performed some other action knowing that interference was a likely result. However, intent doesn't always mean guilt. It's possible for a legal business action to result in interference, which does not serve as the basis for a claim.
Victims must prove that actual interference occurred. If the defendant tried to interfere but failed, so will the claim.
The Interference Was Inappropriate
Not all interference is illegal or immoral. It must be proven that the defendant interfered improperly. For example, if the defendant intended to interfere with a business relationship as punishment for other actions, this is improper. There are many issues used to decide if the interference was improper. These include:
- Motive of the party that interfered
- Interests of the party that interfered
- How the interference occurred
- The victim's interests
- The nature of the broken relationship or contract
- If there is any social interest in preserving the relationship
- If the actions of the defendant meant to cause interference
- Damages that occurred
If interference is proven, two types of damages are available. The first is legal damages. This includes economic and punitive types. It is also possible to receive equitable relief. This is when a court order prevents the defendant from benefitting from wrongful actions.
Tortious interference falls under the category of economic injury. There are two types of injury that interference causes. The first, as mentioned, is a broken contract. The other type is damage to a business relationship. This does not always involve a contract. All that matters in these cases is that the defendant interfered with the relationship between the victims and that this caused damage.
The main difference between these two injuries is the contract. However, both forms of interference are eligible for a claim.
Exceptions for Interest
There are limits to interference in certain states. In Mississippi, for example, interference has not happened if it was in pursuit of a legitimate business interest. This is called 'privileged interference'. In one such case, a school superintendent sent out letters to a voice teacher's students stating that private lessons must be discontinued. The letters were deemed legitimate because the teacher worked for the school system.
It is also important to understand that not all damages count as interference. For example, if a business is able to attract another business's customers, this can cause damage. However, this is not interference. It is only a normal part of business competition. The exception is when one business makes false claims about another. This is interference and may result in a successful claim.
Although interference laws are similar in most states, there are differences. Some states have a higher threshold for evidence. Others give more rights to the defendant. For instance, some states don't consider it interference if it was a result of negligence. In addition, interference does not usually apply to at-will employees.
Many people are confused by interference laws because it's a complicated term. For example, plaintiffs may come across the term 'tortfeasor'. This is simply the legal term for the person that interfered. 'Tort' is another term to understand. Interference cases par of tort law instead of contract law. This is because the third-party was not involved in the contract. Tort law is a type of financial law.
Tortious Interference FAQ
- Is a Contract Necessary?
No. There are two types of interference claims. One relates to contract interference, the other to relationships. If there is an established relationship, no contract is necessary. Some states, like Texas, require you to prove that a contract was likely.
- Can an Attorney Help?
Yes. These cases are very complicated. They also require a great deal of evidence. Hiring an attorney for your interference case should be one of your first steps. A lawyer can make your case much easier. They also may improve your chances of a successful claim.
- Does Interference Apply to Small Businesses?
Yes. Businesses of any size can experience interference. In fact, interference is more likely to occur with small businesses because they are competing for the same pieces of the market. However, damages are less than in interference cases involving large businesses.
- Can Interference Be Prevented?
Not usually. When businesses compete, interference is likely to occur. However, you can protect yourself. First, always try to sign contracts. This formalizes relationships. It also gives you stronger standing. Second, be aware of the signs of interference. This allows you to file a claim before too much damage is done.
Find an Attorney
Tortious interference cases are extremely difficult to prove. This is true whether you are the victim or the defendant. The best way to handle an interference case is with the help of an attorney. Find an attorney to handle your tortious interference case by searching on UpCounsel today.
Some of the best attorneys available today are found on the UpCounsel marketplace. They are knowledgeable, experienced, and affordable. An UpCounsel attorney can help with all your legal needs, including interference claims. Post your legal needs or start searching for a great attorney right away.