Key Takeaways

  • Wrongful interference with a business relationship is a tort involving intentional disruption of a current or expected economic relationship.
  • It includes both interference with existing contracts and prospective business relationships.
  • Plaintiffs must show intentional acts, lack of justification, and actual economic harm.
  • Legal remedies may include compensatory and punitive damages, as well as injunctive relief.
  • Courts consider motive, methods, and the legitimacy of the competition when evaluating claims.
  • Defendants can raise defenses such as privilege, lawful competition, or lack of intent.Wrongful interference in a business relationship is referred to by legal experts as a tortuous interference. On its own, a 'tort' is when reasonable care or deference to another person is disregarded. By extension, businesses themselves can commit torts against individuals or other businesses. Such interference is referred to as a business tort. Whether committed by an individual against a business, a business against a business, or a business against an individual, tortuous interference is divided into two main types: Contract interference and business relations interference.

Interference with a Business Contract

As implied, this type of interference requires a formal business agreement or contract already be in place and then be interfered with. Furthermore, the interference with a business contract must be intentional and the contract itself must be valid. If the defendant can show the interference was accidental or unintentional, then the defendant is not guilty of tort. It also would not qualify as tort if the defendant did not use coercion to interfere with a business contract, and/or did not intend the loss of a business opportunity.

If a valid contract exists and the defendant's knowing breach of it can be documented, this is a straightforward way to demonstrate tortuous interference in a civil court. Courts in most jurisdictions, however, also require the plaintiff to prove the interference caused harm to the business in some way, which in most cases is financial.

Types of Interference in Contractual Settings

In the context of business contracts, wrongful interference may arise in multiple forms:

  • Direct Interference: Where a third party knowingly induces a party to breach an existing contract.
  • Indirect Interference: When a party makes it impossible or impractical for one side to fulfill contractual duties (e.g., by poaching essential employees or suppliers).
  • Pretextual Justifications: Defendants may claim legitimate business purposes, but courts scrutinize such motives closely, especially where malice or deceit is involved.

Importantly, not every breach triggered by third-party actions constitutes tortious interference. The conduct must rise above fair competition and into the realm of misconduct—typically through fraud, intimidation, or manipulation.

Interference with Business Relations

This type of tortuous interference has the same requirements as interference with a business contract, but deals with relations outside of the actual contract. Often, agreements made outside of a formal contract are based on the history two parties have with each other, such as an oral agreement or stipulation of a future contract. Rather than a current agreement, inchoate rights may also be interfered with. Inchoate rights are those which a party does not yet have, but has reasonable expectation to have in the future.

Because business relationship interference is often much less documented than contractual interference, it can be more difficult to demonstrate in court. The burden is often on the plaintiff to prove an actual business agreement exists, then move on to proving such an agreement was knowingly interfered with. Since an outside party may not be aware of a verbal agreement, intentional interference may not have been the case. Or if a contract has yet to be signed, a competitor may see that contract as one still capable of being won.

Examples of Interference with Prospective Business Relationships

Unlike interference with a signed contract, this tort focuses on disrupting potential economic gain. Courts often look at whether a business expectancy was more than speculative.

Examples include:

  • A former employee using insider knowledge to dissuade a client from forming a deal with their previous employer.
  • A competitor spreads false rumors to sabotage a pending business negotiation.
  • Intentionally underbidding only to later withdraw the offer, solely to prevent a competitor from securing a deal.

To succeed, a plaintiff must show the defendant knew of the relationship and engaged in wrongful conduct specifically aimed at disrupting it.

Proving Interference Occurred with a Business Relationship

Whether or not a contract exists to show the relationship, the burden of proof is on the plaintiff to show that the defendant intentionally caused harm through coercion or other interference. Two or more businesses fairly competing for a lucrative customer contract, for instance, is standard business practice and not harmful. Furthermore, the harm must be in a lost business opportunity that the plaintiff reasonably believed it already had.

For example, it might be reasonable to believe a contract would have been signed if a thread of emails shows an agreement on a date and place for signing, and a former employee now working for a competitor knew of the date and coerced the client to sign a contract with the competitor beforehand.

Most often unlawful tortuous interference takes the form of overzealous free market competition. While competition is allowed and encouraged in business, it can become tortuous if it becomes unfair. For instance:

  • Coercing a customer to break its contract with a competitor through deception, threats, or unyielding persistence.
  • Deceiving another company's employees to lure them to work for you instead.
  • Making false claims about a competitor to deter business.
  • Threatening a logistics company if they make a supply delivery to a competitor.
  • Interfering with a party's ability to uphold its contractual obligations.

Common Legal Defenses Against Interference Claims

If accused of wrongful interference with a business relationship, defendants may present the following defenses:

  • Justification or Privilege: If the actions were taken in good faith to protect legitimate business interests, courts may find them justifiable.
  • Lack of Intent: Tortious interference requires intentional acts. Mistaken or unintentional disruption typically does not qualify.
  • Competition Exception: In some cases, engaging in fair and lawful competition—even if it results in lost business for another party—is not tortious.
  • No Valid Expectancy: If the plaintiff cannot prove a reasonable expectation of business or economic advantage, the claim may fail.

These defenses often hinge on facts specific to the case and require careful documentation and legal strategy.

Elements of a Wrongful Interference Business Case

Each jurisdiction is different in the ways it currently and historically has conducted business. Therefore the elements necessary to make a wrongful interference case will also vary by jurisdiction. Most jurisdictions agree upon the following, although it is best to consult a legal expert on a case-by-case basis:

  • The defendant can prove a valid relationship or contract existed.
  • Such valid contract/relationship was willfully violated.
  • The interference was not authorized in any way.
  • Financial or other damages must have been the result of such interference.

Legal Remedies for Wrongful Interference

Victims of wrongful interference with a business relationship may be entitled to:

  • Compensatory Damages: For lost profits, lost business opportunities, and reputational harm.
  • Punitive Damages: In cases involving malice or egregious behavior, courts may award punitive damages to deter similar conduct.
  • Injunctive Relief: Courts can issue orders preventing the interfering party from continuing the wrongful conduct.
  • Attorney’s Fees and Costs: In some jurisdictions or under specific statutes, the prevailing party may recover legal expenses.

Courts may also impose equitable remedies if monetary damages alone are insufficient to address the harm caused.

Frequently Asked Questions

What qualifies as wrongful interference with a business relationship? It occurs when a third party intentionally disrupts a current or potential business arrangement, causing economic harm without justification.

Is a verbal agreement enough to prove interference? Yes, if the plaintiff can show a reasonable expectation of economic benefit and that the defendant intentionally disrupted it.

Can a competitor be sued for aggressive sales tactics? Only if those tactics involve wrongful conduct such as deceit, coercion, or defamation—not merely aggressive but fair competition.

What’s the difference between interference with contract and with business relations? Interference with contract involves an existing, enforceable agreement; business relations interference involves future or potential deals.

Do I need a lawyer for a wrongful interference claim? Yes, because these cases are fact-specific and complex. You can find a qualified attorney on UpCounsel to assist you.

If you are unsure whether you have been the victim of wrongful interference with a business relationship, post your legal need on UpCounsel's marketplace today. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.