Interference With Contract

Bruce and Diana entered into a written contract. Bruce agreed to manufacture high-tech gadgets and sell those to Diana. Diana, in turn, used her international connections to market the gadgets and sell them on the open market. The contract included several terms, including the wholesale price Diana was willing to pay Bruce for his gadgets.

Clark, seeing Diana was making quite the profit with her chain of stores, also wanted to get into the business of selling high-tech gadgets. However, Clark knew Bruce manufactured the best gadgets and the only way Clark would be able to compete with Diana was if he sold Bruce’s goods. Clark approached Bruce and offered a higher wholesale price if Bruce agreed to breach his written contract with Diana and work exclusively with Clark. Bruce agreed and terminated his contract with Diana without justification.

Diana sued Clark for tortious interference with contract. To establish a claim for interference with contract, Diana needs to prove:

1. The existence of a valid and enforceable contract between Bruce and her.
2. A breach by Bruce of his contract with Diana.
3. That Clark is the person who instigated Bruce’s breach of his contract with Diana.
4. That Clark had no justification to instigate the breach.

What Makes It Tortious?

Tortious interference requires a person who is not a party to a contract to interfere with the contract. Since Clark was not a party to the original Bruce-and-Diana contract, his interference would be “tortious.” In this case, Clark knew Bruce had a contract with Diana because Clark asked Bruce to terminate his contract with Diana so Bruce could enter a similar, but higher-paying contract, with Clark. Clark “induced” Bruce to breach the contract with Diana where Bruce otherwise would not have done so.

Bruce, however, is not liable for tortious interference with contract. Bruce is a party to the Bruce-and-Diana contract. Diana’s remedy against Bruce is simply breach of contract. The tortious interference must be caused by an outside third party – in this case, Clark.

Diana’s Damages

Diana is damaged by Clark’s interference because she lost the profit of selling Bruce’s gadgets through her chain of stores. Diana’s measure of damages against Clark is the profit she could reasonably have expected to gain from her contract with Bruce. If Diana was forced to close her stores because of the lost profits from selling Bruce’s gadgets, and this caused Diana to lose profits she would have gained from selling Hal’s novelty rings, she could potentially recover those lost profits as well. The losses caused by Clark’s interference must be reasonably foreseeable for Diana to recover.

Clark’s Defenses

Clark has several defenses to liability for interference: justification, privilege, or lawful action. Clark would not be liable if he was competing fairly in business, was protecting his own legal rights, or acting in good faith. Clark would also have a defense if the contract between Bruce and Diana was not valid or enforceable, or if Bruce’s actions did not amount to an actual breach of the contract with Diana.

Conclusion

Interference with contract claims rely on many different, often intertwined factors to determine whether the parties involved were damaged or have defenses. The legal professionals at SW&L Attorneys can help you through difficult legal problems, litigation, and more. If you need to consult with an attorney about civil litigation, please contact us!

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