Competition is supposed to be good for business – and good for society as a whole. But there are times when business rivals don’t know where the boundaries lie between “fair competition” and a type of improper conduct called “tortious interference.”
One common type of tortious interference occurs when one party knowingly and intentionally induces a second party to break a valid contract they have with a third party with the express goal of damaging that third party’s business.
How would that work in practical terms?
Imagine that a pizza shop, Bruno’s, exclusively buys all of its flour, cheeses and other ingredients for its pizzas from a place called Valley Foods, and the quality of those ingredients has helped Bruno’s develop a very loyal customer base. They have a solid contract that Bruno relies upon.
However, Ralph owns an Italian restaurant in the area, and he wants to put Bruno’s out of business so that he can expand his own pizza menu and deliveries. He also does business – a lot more business – with Valley Foods. When Ralph finds out that Valley Foods is also Bruno’s supplier, he threatens to stop doing any business with Valley Foods unless they breach their contract with Bruno altogether. If Bruno is forced to find a new supplier, the quality and taste of his pizzas may change, and that could erode his business. Bruno might have a claim against Ralph for tortious interference.
To put things another way, tortious interference with a contract involves someone stepping in and somehow meddling with an existing business agreement between two other parties, inducing one of them to break their contract with the other. That meddling can take the form of direct threats, lucrative incentives or even the use of false information.
When your business takes a hit, it can be hard to tell if you’re just the victim of a “bad break” or some sort of wrongful action by another. If you believe that someone purposefully interfered with a contract you had in place with a client, a vendor, a supplier or even an employee, it may be time to seek legal guidance and clarity about your rights and options under the law.