Oftentimes in business transactions, business disputes arise whereby other businesses, individuals, or third-parties, not involved in the business contract, will cause a breach of contract. In such instances, the injured party to the legal contract may have claims against said third parties. Such claims include intentional interference with contract, intentional interference with business relationship and tortious interference with economic relationship (prospective economic advantage).
Third-Party Intentional Interference Claims
With respect to business litigation, Intentional interference with contract is a common example of a third-party interference claim. For businesses, it may be competitors or potential competitors committing this tort. Intentional interference with contract occurs when a person intentionally damages the plaintiff’s contractual or other business relationships. Intentional interference with contract occurs when the third-party tortfeasor convinces a party to breach the contract with the plaintiff, or where he intentionally disrupts the ability of one party to perform his or her obligations under the contract, thereby injuring the plaintiff. For an interference with contract claim, there must be a valid contract already in existence.
In order to state a cause of action for intentional interference with contract, a plaintiff must allege:
- (1) the existence of a valid and enforceable contract;
- (2) defendant’s awareness of the contractual obligation;
- (3) defendant’s intentional and unjustified inducement of a breach;
- (4) subsequent breach caused by defendant’s unlawful conduct; and
- (5) damages.
Intentional interference with business relationships and prospective business relationships are other examples of potential third-party interference claims. Such claims may arise when a third-party prevents the plaintiff from maintaining and/or establishing his business relationship or disrupts a business relationship. Because it is a tort, the conduct must be intentional and the plaintiff will have to prove he was damaged by the conduct of the third-party tortfeasor (i.e. that he either lost the business relationship or was unable to engage in the business relationship due to defendant’s intentional interference).
The elements of the tort of interference with prospective business advantage include:
- (1) plaintiff’s reasonable expectation of entering a valid business relationship;
- (2) the defendant’s knowledge of the plaintiff’s expectancy;
- (3) purposeful or intentional interference by the defendant that prevents the plaintiff’s legitimate expectancy from ripening into a valid business relationship; and
- (4) damages to the plaintiff resulting from such interference.
A cause of action for intentional interference with a business expectancy (prospective business relationship) need not be based on an enforceable contract that is interfered with; rather, the interference with the relationship is what creates the actionable tort.