What You Need to Know About Tortious Interference 

A tort is a civil wrong as opposed to a crime, which is a violation of a criminal statute. Tortious interference is a civil wrong involving a third party who interferes in your business dealings and relationships.  

Perhaps the most common example of tortious interference is when a third party, generally a competitor, induces someone to break a contract they have with you and your business. This can be done by offering a better deal to a supplier, for instance, or by using threats or even blackmail to force someone to break a contract. 

The aggrieved party – say, the business owner who has lost a supplier due to tortious interference – can bring a civil lawsuit to recover losses and damages and to seek injunctive relief, which is basically a cease-and-desist order from the court. The supplier could also sue the third party for interfering with its contractual obligation. 

Perhaps the most famous example of a tortious interference lawsuit occurred in 1984 when Pennzoil sued Texaco for interfering in its purchase of part of Getty Oil. Pennzoil prevailed and was awarded $10 billion in economic and punitive damages. Later, the parties settled on $3 billion. 

If your business has suffered because of tortious interference by a third party, contact the business litigation attorneys at Coffy Law, LLC. With a combined 90 years of experience in business law, the firm’s attorneys have the knowledge and resources to pursue a claim of tortious interference and help return your business and its relationships to the direction you originally intended. 

With offices in New York and New Jersey, Coffy Law, LLC represents clients throughout the nation. 

Understanding Tortious Interference 

The Cornell Law School’s Legal Information Institute (LII) defines tortious interference as “a common law tort allowing a claim for damages against a defendant who wrongfully interferes with the plaintiff’s contractual or business relationships.” 

As mentioned above, a common example of tortious interference involves a contractual relationship. Company A has a contract with Company B to procure chips for its line of recreational drones, but competitor Company C wants in on the market and offers Company B a better price for its chips. Company B decides to take the offer. 

In another example, Company C resorts to threats or intimidation to force Company B to quit supplying Company A in order to bring down its competitor. In both of these instances, Company A is a loser because it must find a new chip supplier. The supplier, Company B, could also be a loser if it is then sued by Company A for breach of contract.  

Types of Tortious Interference 

Not all tortious interference claims involve contracts, however. If a third party interferes with an ongoing or prospective business relationship of any sort, that too can fall under the category of tortious interference. In other words, there are two recognized types of tortious interference: interference with an existing contract and interference with prospective economic advantage. 

• INTERFERENCE WITH CONTRACTUAL RELATIONSHIPS: Often referred to by its abbreviation IWCR, this type of interference involves a third party who intentionally seeks to sway a contractual relationship to harm a competitor or gain advantage for itself, or both. 
• INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE: Abbreviated IWPEA, this type of interference involves parties who have been cooperating for economic advantage without a contract of any sort, though one may be pending. The Pennzoil-Texaco example cited earlier is an example of IWPEA. 

Proving a Tortious Interference Claim 

The third party that you’re suing for tortious interference can always claim that it was just engaged in fair competition. Therefore, to succeed in a lawsuit, you must prove that the defendant – the one you’re suing – acted intentionally and improperly. Mere negligence will generally not amount to a tort. 

The elements in an IWCR case that need to be shown are: 

• You had a valid contract with another party. 
• The defendant had knowledge of the contract. 
• The defendant acted intentionally and improperly. 
• Your business was harmed by the defendant’s actions. 

The elements that must be proven in an IWPEA lawsuit are: 

• You had a business relationship with another party, even if that relationship had not yet taken on the form of a contract. 
• The defendant knew of this relationship. 
• The defendant intentionally and with wrongful means interfered with that relationship. 
• Your business suffered harm as a result. 

Often, plaintiffs will file a lawsuit based on both types of tortious interference, so if one doesn’t succeed, the other might. 

Some examples of improper conduct include the use of fraud or misrepresentation, trade libel, trademark infringement, blackmail, economic pressure, initiating civil lawsuits or criminal prosecutions, and even physical violence.  

Damages Recoverable Under the Law 

Depending on the state in which you file your lawsuit, a tortious interference claim can lead to compensation for economic loss, including expenses, lost profits, and prospective profit; punitive damages if the plaintiff can be shown to have acted with “oppression, fraud, or malice”; and injunctive relief, basically, a cease-and-desist order. 

Speak With an Experienced Business Attorney 

If you feel a third party has been interfering with your business relationships and/or contracts to your detriment and did so deliberately and with knowledge of your relationships, you need to seek legal counsel and advice.  

The business litigation attorneys at Coffy Law, LLC stand ready to answer your questions and evaluate your situation to present you with the best legal options going forward. Reach out immediately if you sense tortious interference in your business.