Tortious interference

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Tortious interference, also known as intentional interference with contractual relations, in the common law of torts, occurs when a person intentionally damages the plaintiff's contractual or other business relationships. This tort is broadly divided into two categories, one specific to contractual relationships (irrespective of whether they involve business), and the other specific to business relationships or activities (irrespective of whether they involve a contract).

Description[edit]

Tortious interference with contract rights can occur where the tortfeasor convinces a party to breach the contract against the plaintiff, or where the tortfeasor disrupts the ability of one party to perform his obligations under the contract, thereby preventing the plaintiff from receiving the performance promised. The classic example of this tort occurs when one party induces another party to breach a contract with a third party, in circumstances where the first party has no privilege to act as it does and acts with knowledge of the existence of the contract. Such conduct is termed tortious inducement of breach of contract.

Tortious interference with business relationships occurs where the tortfeasor acts to prevent the plaintiff from successfully establishing or maintaining business relationships. This tort may occur when a first party's conduct intentionally causes a second party not to enter into a business relationship with a third party that otherwise would probably have occurred. Such conduct is termed tortious interference with prospective business relations, expectations, or advantage or with prospective economic advantage.

In either of the above situations, the tortfeasor's conduct must be intentional. There is no cause of action for merely negligent interference with the performance of a contract.[1]

Case Law[edit]

An early, perhaps the earliest, instance of recognition of this tort occurred in Garret v Taylor, 79 Eng. Rep. 485 (K.B. 1620). In that case, the defendant drove customers away from the plaintiff’s quarry by threatening them with mayhem and also threatening to “vex [them] with suits.” The King's Bench court said that “the defendant threatened violence to the extent of committing an assault upon ... customers of the plaintiff ... whereupon ‘they all desisted from buying.’’ The court therefore upheld a judgment for the plaintiff.

In a similar case, Tarleton v McGawley, 170 Eng. Rep. 153 (K.B. 1793), the defendant shot from its ship Othello off the coast of Africa upon natives while “contriving and maliciously intending to hinder and deter the natives from trading with” plaintiff’s rival trading ship Bannister. This action caused the natives (plaintiff’s prospective customers) to flee the scene, depriving the plaintiff of their potential business. The King's Bench court held the conduct actionable. The defendant claimed, by way of justification, that the local native ruler had given it an exclusive franchise to trade with his subjects, but the court rejected this defense.

The tort was described in the case of Keeble v Hickeringill, (1707) 103 Eng. Rep. 1127, styled as a "trespass on the case". In that case, the defendant had used a shotgun to drive ducks away from a pond that the plaintiff had built for the purpose of capturing ducks. Thus, unlike the foregoing cases, here the actionable conduct was not directly driving the prospective customers away, but rather eliminating the subject matter of the prospective business. Although the ducks had not yet been captured, the Justice Holt wrote for the court that "where a violent or malicious act is done to a man's occupation, profession, or way of getting a livelihood, there an action lies in all cases." The court noted that the defendant would have the right to draw away ducks to a pond of his own, raising as a comparison a 1410 case in which the court deemed that no cause of action would lie where a schoolmaster opened a new school that drew students away from an old school.

The application of the above has since been modified in UK law. In OBG v Allan et al 2008 1AC 1

Wrongful interference: the unified theory which treated causing loss by unlawful means as an extension of the tort of inducing a breach of contract was abandoned; inducing breach of contract and causing loss by unlawful means were two separate torts. inducing a breach of contract was a tort of accessory liability, and an intention to cause a breach of contract was a necessary and sufficient requirement for liability; a person had to know that he was inducing a breach of contract and to intend to do; that a conscious decision not to inquire into the existence of a fact could be treated as knowledge for the purposes of the tort; that a person who knowingly induced a breach of contract as a means to an end had the necessary intent even if he was not motivated by malice but had acted with the motive of securing an economic advantage for himself; that, however, a breach of contract which was neither an end in itself nor a means to an end but was merely a foreseeable consequence of a person’s acts did not give rise to liability; and that there could be no secondary liability without primary liability, and therefore a person could not be liable for inducing a breach of contract unless there had in fact been a breach by the contracting party.

Causing loss by unlawful means: acts against a third party counted as unlawful means only if they were actionable by that third party if he had suffered loss; that unlawful means consisted of acts intended to cause loss to the claimant by interfering with the freedom of a third party in a way which was unlawful as against that third party and which was intended to cause loss to the claimant, but did not include acts which might be unlawful against a third party but which did not affect his freedom to deal with the claimant Strict liability for conversion applied only to an interest in chattels and not to choses in action; this was too radical to impose liability for pure economic loss on receivers who had been appointed and had acted in good faith. This also left open the position where they breached the duty of good faith.

Typical examples[edit]

  1. Tortious interference of business.- When false claims and accusations are made against a business or an individual's reputation in order to drive business away.
  2. Tortious interference of contract.- When an individual uses "tort" (a wrongful act) to come between two parties' mutual contract.

Elements[edit]

Although the specific elements required to prove a claim of tortious interference vary from one jurisdiction to another, they typically include the following:

  1. The existence of a contractual relationship or beneficial business relationship between two parties.
  2. Knowledge of that relationship by a third party.
  3. Intent of the third party to induce a party to the relationship to breach the relationship.
  4. Lack of any privilege on the part of the third party to induce such a breach.
  5. The contractual relationship is breached.
  6. Damage to the party against whom the breach occurs. [2]

The first element may, in employment-at-will jurisdictions, be held fulfilled in regards to a previously unterminated employer/employee relationship.

Damages[edit]

Typical legal damages for tortious interference include economic losses, if they can be proven with certainty, and mental distress. Additionally punitive damages may be awarded if malice on the part of the wrongdoer can be established.

Equitable remedies may include injunctive relief in the form of a negative injunction that would be used to prevent the wrongdoer from benefiting from any contractual relationship that may arise out of the interference, i.e., the performance of a singer who was originally contracted with the plaintiff to perform at the same time.

Additional Example[edit]

Tortious interference with an expected inheritance - One who, by fraud, duress or other tortious means intentionally prevents another from receiving from a third person an inheritance or gift that he would otherwise have received, is subject to liability to the other for loss of the inheritance or gift.[3]

See also[edit]

Notes[edit]

  1. ^ Restatement (Second) of Torts § 766C (1979).
  2. ^ Richards, Jared. "TruCounsel.com". Nevada Theories of Liability. Retrieved 9 September 2011. 
  3. ^ Commerce Bank v. Deborah Flavin Durland, 141 S.W.3d 434 (Mo.Ct.App. 2004). (Believed to be the first claim for tortious interference with inheritance expectancy to withstand appeal in the State of Missouri).

Source[edit]