A tort is an action that results in harm to another individual, which may include:
- Suffering; or
- Unfair loss.
A tort is governed by civil tort laws. These laws serve two basic purposes: to compensate a victim for any losses caused by the defendant’s actions and to deter, or discourage, the defendant from repeating the violation in the future.
What are Business Torts?
Business torts are torts that can be divided into seven categories:
- Tortious interference with contract;
- Tortious interference with business relations;
- Injurious falsehood;
- Negligent misrepresentation;
- Fraud or fraudulent misrepresentation;
- Unfair competition; and
Tortious interference with a business contract will be discussed in the following section. Tortious interference with business relations is similar to tortious interference with a business contract but occurs prior to a contract formation.
In tortious interference, the tortfeasor (liable party) acts intentionally to prevent the plaintiff (victim) from successfully establishing or maintaining a business relationship with a third party when they otherwise would have. The plaintiff must prove that the business relationship would have happened but-for the conduct of the tortfeasor, which may be very difficult.
Injurious falsehood is an intentionally false statement made to cause damage to another individual. It is classified as a business tort because the false statement is confined to damage to an individual’s business reputation. The plaintiff must prove malice by showing that the tortfeasor knew the statement was false when it was made.
Negligent misrepresentation is one of three types of misrepresentation in contract law. Misrepresentation is a general term meaning a false statement of fact that has the effect of inducing someone into a contract. Negligent misrepresentation means that an individual did not directly lie but made a representation without having a reasonable basis.
Fraud is a deliberate deception done to secure unfair or unlawful gain. The intent behind a fraudulent misrepresentation makes it the most serious of all types of misrepresentation. Therefore, it also carries the most severe penalties.
Fraudulent misrepresentation is not required to be a positive verbal assertion. It may be any act that would deceive another individual including:
- Simple gestures;
- Half-truths; and
- In some instances, silence.
Unfair competition occurs when competitors compete on unequal terms as a result of favorable or disadvantageous conditions applied to certain competitors but not to others. Unfair competition can be found in situations where the actions of some competitors harm others by preventing competition on fair or equal terms.
Conspiracy in a civil or business matter occurs when there is an agreement between two or more parties to deprive a third party of legal rights or to deceive a third party to obtain an illegal objective. The elements of conspiracy include:
- A voluntary agreement between two or more individuals;
- That can be oral or in writing or implied by the conduct of the parties; and
- An overt act by one or more conspirators is completed in furtherance of the agreement.
The goes does not have to be accomplished in order for there to be a conspiracy. Typically, if the goal of a conspiracy is accomplished, the conspiracy charge will be dropped. For example, if a conspiracy exists to commit tortious interference with business relations and it is accomplished, the parties would be charged with tortious interference with business relations and not conspiracy.
What is Wrongful or Tortious Interference with Contracts?
Wrongful or tortious interference with contracts occurs when a third party intentionally causes a contracting party to breach the contract. This can be accomplished through an inducement or by disrupting the party’s ability to perform their contractual obligations.
Tortious interference laws were enacted to allow contracting parties the freedom to contract with one another and to fulfill their contractual obligations without third party meddling. The third party interferer is called the tortfeasor.
The tortfeasor is typically an individual that was not a party to the contract and is interfering for their own financial gain. Because of this, the plaintiff’s remedy will be in tort law, rather than contract law.
The plaintiff, or the non-breaching party to the contract, must show that the tortfeasor acted intentionally with regard to both their own actions and the resulting contractual breach. In other words, the tortfeasor must have known there was a contractual relationship and caused the breach anyway.
This cause of action may also be referred to as:
- Tortious interference with contractual rights;
- Intentional interference with contractual relations;
- Unlawful interference with contractual relations;
- Interference with a contractual relationship;
- Interference with a contract;
- Inducement of a breach of contract; or
- Procurement of a breach of contract.
There are also other causes of action that are related to this issue. For example, tortious interference with business relations. However, this cause of action does not require a valid contract to be in existence at the time of the interference.
What are the Elements of the Tort of Wrongful Interference with a Contractual Relationship?
The elements required for proving tortious interference with a contractual relationship may vary by jurisdiction. Generally, however, a plaintiff will be required to show:
- A valid contract or contractual relationship existed;
- The tortfeasor had knowledge of this contract or relationship;
- The tortfeasor intended to induce one of the contracting parties to commit a breach;
- The tortfeasor was not otherwise privileged or authorized to induce breach;
- The contract was, in fact, breached and
- The plaintiff suffered economic damages as a result of the breach.
What are the Remedies for Wrongful Interference with Contract?
Remedies are available to a plaintiff in a tortious interference case. They include both legal damages and equitable relief.
Legal damages for tortious interference with a contract are intended to compensate an individual for economic losses, such as lost profits. In some cases, punitive damages may be awarded. These types of damages are intended to punish malicious wrongful behavior and deter future similar behavior.
Equitable relief may be awarded in cases where monetary awards would not be considered sufficient to resolve an issue or protect a party from harm. For example, a court may order an injunction to prevent the tortfeasor from benefiting from their interference.
What are the Defenses to Charges against Intentional Interference with Contractual Relations?
Yes, there are some available defenses to tortious interference, which may include:
- The defendant is unaware a contract existed between the plaintiff and a third party;
- There was not a contract in effect at the time of the defendant’s alleged improper conduct;
- Breach of contract did not occur;
- A breach of contract would have occurred regardless of the defendant’s conduct;
- The defendant did not intend for their conduct to interfere with a contract; or
- A legal justification or privilege for the defendant’s actions exists.
Do I Need a Lawyer for Tortious Interference with Contract Claims?
Yes, it is essential to have the assistance of an experienced contract lawyers for tortious interference with contract issues. If you have suffered a loss due to tortious interference with a contract, an attorney will be able to advise you regarding your rights to economic recovery or equitable relief. It is important to note that failing to bring your claim in the time specified in the statute of limitations may prevent your ability to recover damages.
If you are accused of tortious interference with a contract, a lawyer can advise you regarding what defenses may be available in your case. A lawyer can also represent you during any court proceedings, if necessary.