Meddling between competitors - Part two: Tortious interference with a contract Meddling between competitors - Part one: Civil Conspiracy Meddling between competitors - Part one: Civil Conspiracy Meddling between competitors - Part one: Tortious interference with contracts
Tortious interference with a contract
This tort is the most common tort used in lawsuits between competitors. The story usually goes something like this: the plaintiff claims the defendant swiped a customer or vendor, while the defendant declares that it was just competing in the marketplace. And so the litigation ensues.
Here are the elements of tortious interference with a contract: (1) the plaintiff must have had either a contract or a prospective contractual relationship with a customer/vendor/etc; (2) the defendant interfered with that relationship; (3) the defendant’s interference must have been intentional; (4) a causal connection must exist between the interference and the damages; and (5) the defendant must not have been justified or privileged to interfere with the relationship.
Before anyone panics about this particular tort, understand that if the interfering business does not act with the purpose of interfering, no liability attaches to the interfering business even if the other business loses a contract. This is good news for businesses that legitimately compete and act with no ill will.
In the spirit of American business, competition in and of itself is not a basis for an interference claim, so long as no restraint of trade occurred (ex: unenforceable non-compete agreements), no wrongful means were used in competition (ex: violence or threats of violence), and the business acted to advance its own economic interests.
Prong 5 of the elements refers to “privilege.” In the context of this tort, privilege means that the interfering party has an actual right to interfere with contractual relations. A good example would be when a contractor or employee is required to report the performance of another employee. In that case, should the employee subject to the report get canned, the reporting employee is privileged and thus free of liability for interfering. The defendant has to prove privilege to the court if it asserts privilege as a defense.
Chris Moander is an Attorney handling business law matters, business litigation, and collections matters throughout Wisconsin.
