In the business world, companies face many threats that can affect their operations and profitability. One of those threats is tortious interference, when an outside party intentionally disrupts another company’s contractual or business relationships, causing economic harm. This can take many forms, hindering an existing contract or a potential business opportunity, both of which can cause big economic harm and damage to your company’s reputation.
Knowing what tortious interference is and how to protect your business from it is key. Working with a New York business law lawyer can be a big help in these situations. An experienced lawyer can help you identify tortious interference, navigate commercial litigation, and make sure your rights are protected by law. This blog will go over what tortious interference is, the different ways it can happen, and why you need legal help.
Definition and Overview
Tortious interference is a claim when one party intentionally disrupts another party’s contractual or business relationships. Contract and tortious interference involve unlawfully undermining business relationships and contracts, with two main types: interference with an existing contract and interference with prospective economic advantage. This can take two forms:
Types of Tortious Interference
Tortious Interference with an Existing Contract: Tortious interference with a contract occurs when someone wrongfully induces a breach of a contract between two other parties, leading to damages for the affected plaintiff. This can happen when a third party interferes with a contract that already exists and causes a breach or prevents it from being fulfilled.
Tortious Interference with Prospective Economic Advantage: When someone interferes with potential business opportunities or relationships that have not yet been contracted.
For Businesses
Knowing these definitions is key for businesses. Companies need to know their rights and protections against this kind of interference. When someone disrupts contractual relations or a potential business deal, it can cause big economic harm. So recognizing the signs of tortious interference is important for protecting your business.
Elements of Tortious Interference
To claim tortious interference, you must prove certain elements. Proving the defendant’s conduct is crucial in establishing liability, as it must be shown that the defendant’s actions were unjustified and went beyond typical ethical behavior in the marketplace. Each element is important in determining if the interference was wrongful and actionable.
Contractual Relationship or Business Relationship
First, there must be a contract or a profitable business relationship. The distinction between types of tortious interference depends on whether a contract exists or not. This means there must be an agreement between parties or a recognized business relationship that has economic value.
Knowledge of the Relationship or Contract
Next, the party interfering must have known about the contractual relationship. This is important because it shows the defendant knew what kind of business was involved and the impact of their actions.
Intentional Interference
The third element is that the party interfering acted intentionally. This means they intentionally did the things that disrupted the contract or business relationship. The interference was without justification meaning the actions were not based on legitimate business interests.
Harm or Damages
Finally, the plaintiff must show they suffered economic harm or damages as a result of the interference, including the impact on prospective business opportunities. This can be lost profits, diminished business opportunities, or other financial setbacks directly caused by the defendant’s actions.
Tortious Interference
To claim tortious interference a plaintiff must prove several key elements. Handling such claims in business litigation is crucial due to the complexities involved. Each of these is important in showing wrongful interference occurred.
Elements to Prove
- Contract or Business Relationship: The plaintiff must show a valid contract or a profitable business relationship existed before the alleged interference. This can be a written contract or established ongoing business dealings.
- Knowledge of the Relationship or Contract: The defendant must have known about the contract or relationship. This means the interfering party knew their actions could impact the existing agreement or business dealings.
- Intentional Interference: The plaintiff must prove the defendant acted intentionally to disrupt the contract or relationship. This means the interference was not accidental but rather a deliberate act to cause harm.
- Harm or Damages: Finally the plaintiff must show they suffered economic harm or damages as a direct result of the interference. This could be lost profits, business opportunities, or other financial losses.
Court
In court, the burden of proof is on the plaintiff. They must present evidence that satisfies all the elements of tortious interference. This may be witness testimony, documentation of the contract or relationship, and evidence of the defendant’s actions. The strength of the evidence is key to convincing the court of the claim.
Defenses to Tortious Interference Claims
When faced with a tortious interference claim defendants can raise several defenses to protect themselves. Knowing these defenses is important for anyone in a dispute.
Privilege or Immunity
Some actions are protected by law. For example, if the defendant’s conduct falls within the bounds of legal privilege or is immune then this can be a strong defense. This means the law recognizes the right to do something without liability.
No Intent
To prove tortious interference the plaintiff must show the defendant acted intentionally. If the defendant can show there was no intent to harm the plaintiff’s business or contractual relationships then this can greatly weaken the plaintiff’s case.
Legitimate Business Competition
Competition is a part of business. If the defendant can show their actions were part of fair competition then this can be a valid defense. Engaging in normal business practices such as advertising or pricing strategies is not wrongful interference.
No Causation or Damages
To succeed with a tortious interference claim the plaintiff must show the defendant’s actions caused the harm. If the defendant can show no direct link between their conduct and the alleged damages then this can kill the claim.
Justification or Rightful Behavior
Defendants may argue their actions were justified or lawful. If the defendant can show their interference was reasonable and in good faith then this can be a strong defense. Actions taken to protect one’s interests or rights can sometimes excuse the defendant from liability.
Consequences and Damages
Tortious interference can have financial and emotional consequences for the party affected. Knowing these damages is important for anyone in a dispute.
Economic
When a party is tortiously interfered with they may suffer direct financial loss. This can be:
- Loss of Income: This is the revenue that was expected but not received due to the interference.
- Loss of Profits: This is the profits the business could have made if the interference had not occurred.
- Potential Benefits: These are future opportunities or contracts that were lost as a result of the wrongdoing.
Non-Economic Damages
And also non-economic damages:
- Emotional Distress: The disruption to business relationships can be extreme.
- Reputational Damage: A business’s reputation can be damaged, and customer trust and future contracts can be lost.
- Harm to Business Relationships: Interference can damage relationships with partners, suppliers, and clients and have long-term consequences.
Punitive Damages
In some cases, punitive damages may be awarded. These are not to compensate the plaintiff but to punish the defendant for egregious conduct. The goal is to deter similar conduct in the future. Courts will consider:
- Degree of Conduct: The more serious the interference the more likely punitive damages.
- Defendant’s Intent: If the defendant acted with malice or to harm then more punitive damages.
Consult With an Experienced New York Business Law Attorney ASAP!
If you suspect that your business is a victim of tortious interference or want to take proactive steps to protect your contractual and business relationships, don’t wait to seek professional legal advice. At Rosenbaum & Taylor, our team is dedicated to helping businesses navigate complex legal challenges and safeguard their interests. We understand the impact that tortious interference can have on your company and are committed to providing the knowledgeable support and representation you need.
Contact us at [phone] today for a free case review!
