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Corporate contract meddling may constitute tortious interference

On Behalf of | Dec 1, 2020 | Business Law |

Market capitalism encourages competition and shrewd business acumen. Consequently, provided they do not run afoul of federal, state or local laws, business executives typically enjoy wide latitude to conduct business as they see fit.

Nevertheless, interfering with another organization’s contractual relationships may expose a company and its leaders to civil liability. Tortious interference is a common law tort that holds contract interferers responsible for the contracting company’s economic damages, which may be considerable.

The elements of tortious interference

Meddling with another company’s contractual relationships may be smart business. For it to constitute tortious interference, though, each of the following elements must be present:

  • The existence of a valid contract between the complaining company and a third party
  • Knowledge of the contract’s existence by the allegedly offending company
  • The intention of the offending company to interfere with the contract
  • Actual and improper interference with the contract
  • Damages to the party claiming tortious interference

Impropriety in contract interference

Under a tortious interference theory, interfering with a contract is only off-limits if the interference is improper. When weighing whether interference crosses this legal threshold, courts often consider the following factors:

  • The conduct that contributed to the interference
  • The motivation of the allegedly offending party
  • The financial and other interests of each party
  • The relationship between the allegedly offending party and the damaged one
  • The nature and extent of the harm

Proving tortious interference clearly requires performing a fact-intensive analysis. Nevertheless, if a damaged party can prove all the elements of the business tort, it may be able to secure financial damages or other legal remedies.