Tortious Interference with Contract or Prospective Advantage

Tortious Interference with Contract or Prospective Advantage

Not only is interfering with the contracts of others unscrupulous, it’s also a violation of California law that can give rise to expensive punitive damages.

Interference with Contract

Intentional interference with contractual relations (also known as tortious interference with contract) happens when one tries to prevent the performance of a contract between others. This commonly occurs when an employer hires an employee, and in doing so knowingly helps the employee violate a noncompete agreement. Interference with contract consists of the following requirements as articulated in the case of Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990):

  • A contract existed between the plaintiff and another party.
  • The defendant knew of the contract.
  • The defendant acted intentionally to induce one of the parties in the contract to breach or otherwise disrupt the contract.
  • The contract was actually breached or disrupted.
  • Damages resulted from the breach of contract such as lost profits.

Sometimes a party cannot prove that a contract existed. In these cases a lawsuit for intentional or negligent interference with prospective advantage is available.

Intentional or Negligent Interference with Prospective Advantage

Interference with prospective advantage is similar to interference with contract except that it covers a broader range of relationships. This commonly occurs when a competitor makes false statements against a rival company in order to deter customers from doing business with the rival.

The requirements for both intentional and negligent interference with prospective advantage are identical to each other except for the element of intent. The requirements are:

  • The plaintiff and another party were in a relationship that probably would have benefitted the plaintiff.
  • The defendant knew or should have known of the relationship.
  • The defendant engaged in wrongful acts such as breach of contract, misrepresentation, or other violation of the law.
  • The relationship was disrupted.
  • Damages resulted from the disruption.
  • The defendant’s wrongful conduct was a substantial factor in the damages.

Additionally, for intentional interference with prospective advantage the defendant must have intended to disrupt the relationship. A defendant need not intend to disrupt the relationship for a claim of negligent interference with prospective advantage. Rather, for negligent interference the defendant must owe a duty of care to the plaintiff and breach the duty of care.

A duty of care can arise from a statute or contract. However, as the Court explained in Lange v. TIG Insurance Co. (1999) a duty of care exists in circumstances where the defendant’s conduct is so blameworthy that they should have known that they owed a duty of care.

In other words the duty of care can be proven so long as the defendant’s wrongful act was sufficiently blameworthy. For this element to be met the wrongful act must be in some way illegal; violation of some state, federal, or other law will suffice. On the other hand, a legal but unscrupulous act will not meet the wrongful act requirement.

Experienced Orange County Business Lawyer Can Help You Recover

With the economy still stagnant some turn to tortious interference to gain an economic advantage over their competition. When this happens you need an experienced business attorney to ensure that you receive all available legal remedies and put an end to the interference. To learn more call the Law Offices of Tony T. Liu today at (714) 415-2007.

have a Question?
phone numbers