Business torts, also referred to as economic torts, are tortious interference actions that are designed to protect trade or business. These types of torts can be placed in one of several categories, including, but not limited to:
- Tortious interference with contract;
- Injurious falsehood; and
- Tortious interference with business relations.
Tortious interference with a contract occurs when a third party intentionally causes a contracting party to commit a breach of contract. It may also occur when a third party disrupts the ability or one party to perform their obligations under the contract.
As a result of these actions, the plaintiff does not receive the performance that was promised under the terms of the contract. In order to prove tortious interference occurred, a plaintiff must show:
- A contractual relationship or beneficial business relationship existed between the two parties;
- A third party had knowledge of that relationship;
- Intent of the third party to induce a party to the relationship to breach the relationship;
- There was no privilege on the part of the third party to induce such a breach;
- The contractual relationship is actually breached; and
- Damage to the party due to the breach.
Injurious falsehood arises when an individual makes an intentionally false statement in order to cause damage to another. This is classified as a business tort because the false statement is intended to damage an individual’s business reputation.
The plaintiff must prove there was malice. This can be done by showing that the tortfeasor knew the statement was false when it was made.
Tortious interference with business relations is explained below.
What Is Interference with Business Relations?
Tortious interference with business relations arises before a contract is formed between two parties. The intentional interference with business tort may also be referred to as tortious interference of business or interference with prospective contracts.
Generally, business relationships may be based on contracts. However, in many cases, these relationships are formed based on an oral agreement or a history of prior dealings between the parties.
Therefore, interference with business relationships may involve a breach of contract but may also include a variety of unfair business acts or practices. The main difference between tortious interference with contract and tortious interference with business is that, in the first, a valid contract already exists and the second may be based on a prospective contract or the relationship between the parties.
When interference with business relations occurs, the tortfeasor prevents the plaintiff from successfully establishing or maintaining a business relationship with a third party. This conduct causes the third party not to establish a relationship with the plaintiff when they otherwise would have.
The conduct of the tortfeasor must be intentional. The plaintiff is also required to prove that the business relationship would have happened but for the conduct of the tortfeasor, which may be difficult.
There are several elements that a plaintiff will be required to prove to show tortious interference. These elements are discussed below.
What Are the Elements Required to Prove Interference with Business Relations?
It is important to note that interference with business relationships is often more difficult to prove than interference with a contract. This is due to the fact that it may be difficult to establish whether a valid business relationship actually existed.
In order to prove wrongful interference with a business relationship, the majority of jurisdictions require a plaintiff to prove the following elements:
- 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 dealings between the parties; and
- The defendant’s interference resulted in damages to the plaintiff.
In order to hold an individual liable for tortious interference, the plaintiff must show that the defendant acted intentionally. Unintentional or accidental actions do not constitute the tort of interference.
In addition, the individual must have intended both the coercion of the party as well as the loss of business opportunity that resulted. The law allows for the plaintiff to recover lost profits based on future contracts or future business profit expectations.
These projected losses, however, must be based on actual, verifiable figures. The cannot be merely illusory or speculative and must be clearly definable.
For example, a plaintiff will likely be able to recover for the loss of future transfers of stocks that are already in existence. In contrast, they will not likely be able to recover lost profits on stocks that did not exist at the time of the agreement.
The law allows the right to competition, which means that businesses are free to engage in competitive business practices. For example, competing businesses are allowed to avoid dealing with other businesses that are competing in the same area or field as them.
They are, however, prohibited from taking any actions that interfere with business, for example, preventing the delivery of a competitor’s product through the use of violence.
What Are the Available Remedies for Interference with Business Relations?
There are numerous remedies that may be available for parties who have been subjected to interference with business relations. A non-breaching party may be entitled to recover for economic losses that they would have gained through the contract or business relationship.
In addition, punitive damages may be awarded in some cases if the plaintiff can show that the interfering party also acted with malicious or criminal intent.
There are also equitable remedies that may be available, for example, a negative injunction that prohibits the breaching party from obtaining profits based on the tortious interference. Courts have broad discretion when issuing damages awards.
The court will analyze a variety of factors, including the prior history of the business dealings between the parties and the specifications listed in any contracts. The remedies in these cases may be similar to those available in breach of business contract cases, for example, compensatory damages awards.
A compensatory damages award is usually provided for the purpose of restoring the plaintiff to the position they were in prior to the loss or harm occurring. In business relations cases, this would include things such as lost profits.
If an individual has suffered interference with business relations, it is in their best interests to consult with a business contract lawyer who can help them maximize the amount of damages they receive.
Do I Need a Business Lawyer?
If you have suffered loss due to interference with business relationships, it is important to consult with a business lawyer. Your lawyer can advise you of your rights and what remedies may be available to you.
As noted above, these types of cases may be difficult to prove. A trained lawyer is best equipped to gather and present evidence of this nature.
Having a lawyer on your case may be your best chance to recover lost profits or obtain other forms of relief. If you have been sued for interfering with business relations, your attorney can help defend you in court.
If you have been sued for this tort, your lawyer can help prevent you from having to pay an unreasonable amount of damage to the plaintiff.