Digging Deep in Tort

It is quite obvious that when you carry out your business or contractual obligation, you would not like any third party to interfere or induce in your business or contractual matters. So, here is the provision that gives you the freedom to contract and execute the same without any third party’s improper interference.

As the name itself suggests the tortious interference is a situation in which third party intentionally interferes to causes breach of contract. But why any third party would interfere in your business dealing and contracts?

Everyone in the market wants to stand out and make most out of it. Also, healthy competition is often encouraged but sometimes competitive behavior jumps into the realm of improper and tortious conduct and that is when the courts steps in.

The third party or the defendant can interfere by inducing or disrupting a party’s ability to perform their contract. Tortious interference lawsuits for tortious interference can be executed when there is interference with a contract or business expectancy.

For example, A in order to defeat his erstwhile partner B, writes to all the potential parties with whom A was about to get in contract inducing them to not to enter into contract with A. X induces employees of Y to break their contract and join them.

COMMON FORMS OF TORTIOUS INTERFERENCE

Tortious Interference can happen in many ways. Someone could offer below market prices to induce a breach, they could blackmail or threaten someone into violating a contract, or they could make it impossible for the other person to perform and receive the benefits of that contract - by refusing to transport goods, for instance.

WHAT ARE THE ELEMENTS REQUIRED TO PROVE TORTIOUS INTERFERENCE?

Let’s go through the given example before coming up to the elements of tortious interference.

For example, Mr. P has an existing contract with Mr. Q and Mr. R is aware about it. Mr. R induces Mr. Q to break the contract with resulting damage to Mr. P, then this is tortious act for which Mr. R will be liable to Mr. P for the injury done to him. 

• There exist valid contract or economic expectancy between the parties.
• The third party or the tortfeasor had knowledge of the contract or expectancy.
• The tortfeasor intended to induce one of the contracting parties to commit breach though he was not authorized to induce breach
• As a result, contract was breached.
• The plaintiff suffered specific economic damage.

SO, ANY KIND OF INTERFERENCE BY THE THIRD PARTY WILL BE A TORTIOUS INTERFERENCE?

The motive plays a major role in deciding whether the action is tortious interference or not. The improper motive behind the action the third-party action can held the interference as tortious interference, though the same actions with a legitimate motivation might not constitute a tort.

Let’s understand it with the example;

Murdy could refuses to carry out business with Burdy after knowing that Burdy has contracts with the organization that Murdy finds immoral. Murdy also knows that their business relation is more important for Burdy than any other organization’s and that his refusal to deal is substantially certain to cause Bill to terminate his contractual or business relationship with the other organization. Here, as the motivation is not improper, hence the tortious interference will not be attracted.

On the other hand, if Murdy means to punish the other organization or put them out of business by taking the advantages of their relationship with Bill away, it is more likely that a tortious interference has occurred.

FACTORS TO DETERMINE IMPROPER INTERFERENCE

Here are the various factors that go into a determination of whether an interference was improper or not:

• The type of conduct;
• The actor's motive;
• The actor's interests;
• The interests of the other parties;
• The social interests in protecting the contract versus protecting the actor's freedom of action;
• How closely related the actor's behaviour is to the interference; and
• The relationships between the parties;
• Damages.

Once tortious interference has been established, the plaintiffs are entitled to damages. These damages including monetary loss, punitive damages, and more.

This is from us on this interesting theme and our team hopes that it can start a communication in the legal fraternity. Let us know through our networking platform what you think about it!

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