A claim for interference with economic relationship arises when a third party intentionally causes a party to a contract to breach or terminate the contract. A claim of interference with economic (or business) relationship falls under the general category of tortious interference. The business torts that most often occur in connection with economic relationships, which also fall under the unfair competition practice category are: breach of contract, interference with economic relationship and interference with prospective economic advantage.
The legal elements of interference with economic relationship are the following:
- The existence of a valid business relationship or expectancy, with the reasonable probability of future economic benefit to the party that was injured
- Knowledge of the business relationship or expectancy on the part of the party causing the injury or damage
- A reasonable certainty that, except for the improper conduct of the party causing the injury or damage, the party that was injured or damaged would have entered into the business relationship or continued the business relationship
- Interference of the party causing the injury or damage that was intentional, as opposed to negligent
- Economic damage and/or loss of business due to the intentional interference with the business relationship
A plaintiff claiming the tort of interference with economic relationship must prove that the defendant acted intentionally and not accidentally. The law allows for recovery of lost profits, but the projected losses must be proven based on actual data and cannot be speculative.
Interference with economic relationship claims are often associated with other common law and statutory causes of action. For example, a contract dispute in the business context may also present a cause of action under the common law of trade secrets, breach of fiduciary duty, employee noncompete, or trademark infringement. While interference with business relationship claims may involve a breach of contract, they may involve a variety of unfair business practices.
While there are important distinctions between the tort of inducing breach of contract and the tort of interference with economic relationships, there are also many similarities. For example, the existence of some specific contractual business relationship between the parties is required before either business litigation matter would be actionable. Keep in mind that oftentimes competition is permitted in the business setting (unless a non-compete or related contractual provision is involved). However, intentionally interfering with business relationships for the purpose of preventing those business relationships to continue is prohibited.