Wrongful Interference with a Business Relationship

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 What Is a Breach of Contract? What Is Wrongful or Tortious Interference with Contracts?

A contract is a legally binding document that details the rights and obligations of an agreement between two or more people. A breach of contract is what happens when one party to a valid contract fails to fulfill their side of the agreement. The contract’s terms are what instructs the parties in what they must do, and how they are to do it, in order to uphold their end of the bargain. If a party does not adhere to these instructions, the non-breaching party will be permitted to file a lawsuit against them in court.

A breach may be either partial or complete breach, as well as substantial or minor. Considering these factors will help the court determine what type of damages should be awarded to the non-breaching party.

Wrongful or tortious interference with contracts happens when a third-party intentionally causes a contracting party to commit a breach of contract. They may accomplish this through inducement, or by disrupting a party’s ability to perform as detailed by the terms of the contract. Tortious interference laws are in place to allow parties the freedom to contract with one another and meet their obligations, without any interference from a third-party.

The third-party who is interfering is referred to as the tortfeasor. This is generally a person that was not originally a party to the contract, and is interfering for their own financial gain. Because of this, the plaintiff’s remedy will be prescribed under tort law, as opposed to contract law. The plaintiff must prove that the tortfeasor acted intentionally, in terms of both their own actions and the resulting contractual breach. What this means is that they must have known about the contractual relationship and caused the breach anyway.

Wrongful or tortious interference with contracts goes by other names, including:

  • 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; and/or
  • Procurement of a breach of contract.

A similar cause of action would be tortious interference with business relations. However, this does not require that a valid contract exists at the time of the tortfeasor’s interference.

What Elements Are Required to Prove Wrongful Interference?

It is important to note that the specific elements for proving tortious interference could vary from jurisdiction to jurisdiction. Generally speaking, a plaintiff must meet the following elements in order to prove wrongful interference:

  • A valid contract or contractual relationship existed;
  • The tortfeasor knew of this contract or relationship;
  • The tortfeasor intended to induce one of the contracting parties to breach the contract;
  • The tortfeasor was not otherwise privileged nor authorized to induce a breach;
  • The contract was actually breached; and
  • The plaintiff suffered specific economic damage as a result of the wrongful or tortious interference with the contract.

What Are the Remedies for Wrongful or Tortious Interference With Contracts?

In general, remedies issued in a tort case are dependent upon the type of harm caused to the plaintiff, as well as the seriousness of the harm caused. Some of the most common remedies awarded in a civil tort case include compensatory damages, which are monetary damages awarded to a plaintiff. These are intended to compensate for economic harm such as lost wages, medical expenses, or other costs related to repairing or replacing property.

The court may also issue an injunction, which orders the defendant to stop doing what has caused harm to the plaintiff. An example of this would be how a defendant who has been found liable for spilling toxic substances may be ordered to clean up the spill, as well as take action to avoid future spills.

Although relatively rare, plaintiffs could be awarded punitive damages in very specific circumstances. Punitive damages are intended to punish the defendant for their harmful actions, or for gross negligence. These damages are rare because they are only awarded in the most egregious of cases where the court feels that compensatory damages would be insufficient. Or, they may be awarded when the defendant must pay a price beyond compensating the victim for their actual damages.

Remedies that are commonly available to plaintiffs involved in a tortious interference case include both legal damages and equitable relief. Legal remedies are what allow the plaintiff to recover monetary damages, which were previously discussed. To reiterate, these include damages such as:

  • Compensatory damages;
  • Lost profits;
  • Punitive damages;
  • Lost wages;
  • Expectation damages; and
  • Restitutionary damages in order to prevent unjust enrichment of the defendant.

Equitable relief may consist of an injunctive order which prevents the tortfeasor from benefiting from their interference. Equitable remedies are a distinct category of remedies that can be awarded in breach of contract cases, and are actions that the court prescribes to resolve the breach.

Generally speaking, it is often required that legal damages be unavailable before a court will issue equitable relief. Some examples of equitable remedies include:

  • Specific Performance: This is a court order requiring the breaching party to completely perform their part of the contract. An example of this would be requiring the breaching party to deliver goods which have already been paid for. Another example would be ordering the breaching party to provide payment for services rendered;
  • Contract Rescission: Under contract rescission, the old contract which was breached is rescinded or cancelled. A new contract may be written in its place, which more clearly addresses the different needs of each party involved in the contract;
  • Contract Reformation: The former contract is rewritten in order to more accurately reflect the true intentions of each party. The particular remedy requires that a valid, working contract exist, otherwise there is nothing to re-write. Reformation is commonly prescribed where there was some mistake or misrepresentation in one of the contract terms, and may be in whole or in part. Reformation is sometimes referred to as rectification; and
  • Constructive Trust: Constructive trust may be awarded when the defendant wrongfully obtained the plaintiff’s property, and the defendant has used the plaintiff’s property to increase the value of their own property.

Do I Need an Attorney for Wrongful or Tortious Interference with Contracts?

If you are involved in a contract and have suffered losses due to wrongful or tortious interference with contracts, you should consult with an area contract attorney as soon as possible. Because laws regarding contracts and torts vary from state to state, a skilled and knowledgeable local attorney would be best suited to understanding how your state’s specific laws may influence your legal options.

An experienced local contract attorney can review your contract, as well as any supplementary documentation, in order to determine how you should proceed. If you are the tortfeasor, an attorney can help you determine whether there are any legal defenses available to you based on the specifics of your case. If you are the victim of wrongful or tortious interference with contracts, an attorney will represent you in court while working towards an appropriate damages award.

Because failure to bring your claim in a timely manner could limit or completely prevent you from recovering your losses, you should consult with an attorney immediately. This will provide you with the best chance of a favorable outcome.

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