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Wrongful Interference With Contractual Relations

/26 Dec 2017
/By admin

Most people realize that if there are two persons to a contract, either of them may sue if one of the party’s breaches (violates) the terms of that contract. However, either of the two people may also have grounds to sue a third person for interfering with that contract. This claim is known as one for Wrongful Interference with Contractual Relations, sometimes referred to as Tortious Interference with Contractual Relations. If this arises, it is best to consult a Breach of contract lawyer.

The claim arises when someone not a party to the contract intentionally interferes with the contractual relations of the parties. The aggrieved person must prove five elements to prove this claim:

  1. The existence of a valid contractual relationship or business expectancy.
  1.    Proof that the offending party had knowledge of the relationship.
  1.   An intentional interference inducing or causing a breach or termination of the relationship or expectancy.
  1.   That the offending party interfered for an improper purpose or used improper means.
  1.   Resulting money damages.

Here are examples of Wrongful Interference with Contract:

  1.  Assume John Smith Company receives profits each month by selling construction gravel to the Mary Jones Company. Competitor Alex Brown Company falsely tells personnel at the Mary Jones Company that John Smith gravel is contaminated with hazardous waste. If Mary Jones Company then ceases the purchase of gravel from John Smith Company, then John Smith Company could successfully sue Alex Brown Company for the resulting loss of profits.
  1. Assume that Ajax Shipping Company has a contract to haul furniture of Boutique Furniture store to customers who purchase furniture from the store. Over a period of several months, competitor ABC Shipping Company contaminates the gas tanks in the trucks of Ajax Company, thereby preventing the delivery of furniture. If Boutique Furniture then cancels its contract with Ajax, then Ajax would be able to sue ABC Company for money damages.

Aggressive Competition is Permitted

Keep in mind that the doctrine of Wrongful Interference with Contract does not prevent very aggressive competitive practices designed to take business away from a competitor. For example, it would be totally legal, in the example above, for ABC Shipping to radically drop its prices so as to take business away from Ajax Shipping, even if the lowered prices meant that ABC would temporary not make a profit. Similarly, there is nothing in the law to prevent ABC Shipping from producing brochures which (honestly) promote the superior safety and reliability of its trucks as compared to the Ajax Company trucks.