Contracts are key to reliable, profitable business relationships and indeed the economy as a whole. Without contracts, little business would get done because nobody would trust anyone else to keep their promises. Because of how critical contracts are to the business world, the law goes to great lengths to protect them. One way this is done is by preventing third parties from unjustly interfering with contractual relationships. This has led to the creation of a cause of action known as tortious interference with contract.
You may need legal assistance to pursue one of these lawsuits against another party. Or you may be accused of interfering with someone else’s contractual relationship. Either way, having skilled legal counsel on your side will make a difference. Count on the dedicated New York business litigation attorneys of Rosenbaum & Taylor.
What Is Tortious Interference With a Contract?
Tortious interference with a contract occurs when a third party intentionally and improperly disrupts an existing contractual relationship between two other parties, causing economic harm.
It’s important to note that courts distinguish between fair competition and tortious interference. The defendant’s conduct must go beyond typical ethical behavior in the marketplace to be considered tortious interference. Generally, this means the defendant knows a contract exists and interferes with the intent of causing one party to break the contract.
A company (Company A) has an exclusive supply contract with a manufacturer. A competitor (Company B) learns of this contract and, in an attempt to disrupt it, offers the manufacturer a significantly higher price for their products. The manufacturer, enticed by the better offer, fails to honor its contractual obligations to Company A and supplies Company B instead.
If Company A can prove Company B had actual knowledge of the existing contract and engaged in intentional interference, Company A can file a claim for tortious interference against Company B. Cases like these are common in business litigation.
The plaintiff (Company A) may be able to recover damages including expected benefits from the contract, costs incurred due to the interference, lost profits, and potential harm to their reputation. In some cases, punitive damages may also be awarded if the conduct is deemed particularly egregious.
Proving a Tortious Interference With Contract Claim
The law frowns on interference with contractual relationships. Actively inducing a breach of contract can give rise to commercial litigation against the offending party. To prove tortious interference with a contract in New York, the following elements must be shown.
The Existence of a Valid Contract
The plaintiff and a third party must have a legal, enforceable contract between them. The defendant will usually not be an employee or agent of either the plaintiff or the other contracting party. Rather, the defendant acts as an outsider to the contractual relationship.
The Defendant Knew About the Contract
It must be proven that the defendant actually knew the contract existed. If neither party in the business relationship made the defendant aware of the contract, this element will be difficult to establish.
The Defendant Improperly Attempted to Cause a Breach
This means that, without justification, the defendant acted improperly to bring about a breach of contract. The interference must be wrongful, which is not an easy element to meet. Generally, a court will require evidence that the defendant used unfair, dishonest, or wrongful means to induce a breach.
Actual Breach of the Contract Took Place
You must show the defendant’s conduct caused an actual breach of contract. In other words, the defendant’s wrongful act caused the other party to violate the contract with the plaintiff. Such action causes harm to the plaintiff. This leads to the final element.
Damages Resulted From the Breach
You must show the damages caused by the defendant’s interference in contractual relations. Such damages will usually be monetary. A court will consider the financial benefits the plaintiff lost because of the broken contract. What would the plaintiff have gained from the economic relationship, if everyone had followed the contract terms?
Our New York Business Lawyers Can Represent You
Our New York business law attorneys can explain the above elements as they relate to your case. We understand the elements that must be proven by the plaintiff, who bears the burden of proof.
If you are the plaintiff in a tortious interference lawsuit, we will investigate the circumstances and gather evidence to prove your claim. We will use discovery and other means to obtain evidence and begin building a case.
If you’re accused of tortious interference with a contract, we will mount a solid defense while holding the plaintiff responsible for proving each element. Where the evidence makes it possible, we will attack each element of the plaintiff’s case. If the plaintiff cannot prevail on all points we will demand a jury verdict in your favor.
It may also be possible to settle the case outside of court. Regardless of which side you’re on, an experienced New York business lawyer can negotiate a settlement in your favor. This can save considerable time, money, and hassle by avoiding a trial.
Dedicated Legal Counsel for Your Business Needs
Whether you are the plaintiff or defendant in a tortious interference with contract matter, count on Rosenbaum & Taylor. We understand the importance of contracts and we understand the New York laws that govern them. Contact our team today to learn more.
