In general, business relations may be based on a contract, but more often than not many business relationships are formed on oral agreement or on a history of prior dealings between the parties. Thus, interference with business relationships may involve a breach of contract, but it could also include a variety of unfair business acts or practices.
Interference with business relations falls under the general category of tortious interference. Tortious interference covers two types of torts: Interference with contracts and interference with business relations. The two are essentially the same, except that in the first instance, a valid contract is already in existence. The second type, interference with business relations, may be based on a future (“prospective”) contract or it may be based on the relationship itself.
- A valid business relationship or business expectancy existed between the parties
- The defendant had knowledge of the relationship or expectancy
- The defendant intentionally coerced one of the parties to terminate the business relationship, breach a contract, or withhold a valid business expectancy
- The defendant was not authorized to interfere with the parties’ dealings
- The defendant’s interference resulted in damages to the plaintiff
In addition, the law allows recovery for lost profits based on future contracts or future business profit expectancies. However, the projected losses must be based on actual, verifiable figures. The losses cannot be merely speculative or illusory; they should be clearly definable. For example, a party will likely be able to recover future transfers of stocks that are already in existence. On the other hand, they will probably be not be able to recover lost profits on stocks that did not yet exist at the time of the agreement.
Finally, laws permit the “right to competition”, which means that businesses are free to engage in competitive business practices. For example, competitors are allowed to avoid dealing with other businesses that are competing in the same field as them. However, they are prohibited from taking actions that interfere with business, such as preventing the delivery of a competitor’s product through the use of violence.
There are many remedies available for parties who have been subject to interference with business relations. The non-breaching party may be entitled to recover economic losses that would have been gained through the contract or business relation. Also, punitive damages can sometimes be recovered if it can be proven that the interfering party also acted with malicious or criminal intent.
Equitable remedies may also be available, such as a negative injunction prohibiting the breaching party from obtaining profits based on the tortious interference. A court has broad discretion when issuing damages awards, and will analyze a variety of factors including the prior history of the parties’ business dealings, and the specifications listed in any contracts.
If you have been the victim of interference with business relations, it is recommended that you contact a business lawyer who can help you determine your rights. You may be able to recover lost profits or obtain other types of relief. Also, if you have been accused of interfering with business relations, an attorney can help defend you in court.