What is Tortious Interference?

Tortious interference occurs when a person damages another person’s contractual relationships or other business relationships on purpose. Under such circumstances, the victim can file a claim against the person who adversely affects a business contract or the enjoyment of the property right. These claims are often pursued in actions between competing businesses. Typical actions giving rise to liability include inducing customers to breach contracts, enticing employees to leave, and making false statements about the competing business.

Courts have required that the plaintiff in a tortious interference case provide proof that the defendant acted improperly, purposefully and maliciously with intent to cause harm to the plaintiff by inducing a third party or parties to discontinue or refrain from a business relationship with the plaintiff. Furthermore, the defendant must have caused economic injury to the plaintiff.

Courts have also limited this principle by allowing the allegation to be brought against only those defendants who were strangers to the relationship prior to the alleged interference. In contract cases, there must also be evidence that a contract existed. An allegation involving business relationships may be brought even when there is no contract.

Defenses against tortious interference lawsuits include several privileges, including the right of fair competition. Fair competition is always permitted. Former employees may seek employment from a competing business or start new businesses themselves. They can make use of expertise from a former employer and compete for the same customer base. As long as they do not use proprietary information or make misleading statements, they may attempt to recruit customers they procured for the former employer. To guard against competition from a former employee, many employers put restrictive covenants in their employment contracts.

Tortious interference was originally used in an English case in 1853. A rival theater owner, the defendant induced a singer hired at the competing plaintiff's theater to breach her contract. The court decided that the plaintiff could recover damages from the defendant for his interference with the singer's contract. It held that the inducement was a form of unlawful competition. Since that case, tortious interference has been applied in a wide-ranging array of contractual contexts.

As with any tort claim, the monetary damages that may be recovered include all damages directly caused by the interference. In contrast to damage awards for breach of contract, in which only foreseeable damages are compensated, even damages that were not foreseeable are recoverable in interference cases. Successful plaintiffs may potentially recover attorney’s fees and general damages. In those cases with egregious misconduct, the claimant may receive punitive damages.