Since contracts are legally binding, laws exist to prevent wrongful, or tortious, interference with existing contracts. That interference can occur when an outside party purposefully leads someone in a business agreement to break the terms of the agreement. For example, a person may spread false information that leads one company to stop doing business with another company. Although the contract is between two people or companies, the focus of tortious interference is on the wrongful behavior of a third party disrupting the contract.
The Elements of Tortious Interference
A plaintiff can make a case for tortious interference if the following four elements exist: The plaintiff is a party to an existing contract; the defendant has purposefully and knowingly disrupted or interfered with the existing contract; the interference was the cause of damage to the plaintiff; and the plaintiff suffered actual losses or damage as a result of the interference. See, e.g., Butnaru v. Ford Motor Co., 84 S.W.3d 198, 207 (Tex. 2002).
The elements of tortious interference are not quite as clear cut as they seem. For example, interference is only wrongful if it is intentional. The defendant must believe that his or her actions would interfere with the existing contract. In addition, a defendant may not be liable if his or her conduct is privileged or legally justified. For example, if the action is within the rights of the defendant, or if the defendant has rights equal to or above the plaintiff’s rights, then proving tortious interference is difficult. A defendant may also prevail with a “justification defense” if the case goes to trial and the jury finds that the defendant, though wrong, acted in good faith. Prudential Ins. Co. of America v. Financial Review Services, Inc., 29 S.W.3d 74, 77–78 (Tex. 2000).
A tortious interference claim will prevail even if a contract is terminable-upon-notice. However, encouraging someone to terminate a contract after sufficient notice is not necessarily tortious interference since it is within that person’s right to end the contract, especially if the defendant offers better options. For example, a recruiter may encourage a football player to exercise his right to terminate a contract and join a different team offering better benefits. Such encouragement is not tortious interference since the player has a right to choose a better opportunity. Tex. Bus. & Com. Code Ann. §§ 15.50 to 15.52.
Interfering with contracts and causing harm to a business may lead to litigation. Given the difficulty of establishing intentionality and liability when determining tortious interference with existing contracts, hiring a qualified lawyer is crucial to successfully handling a tortious interference with existing business relations claim.
All information provided on Silblawfirm.com (hereinafter “website”) is provided for informational purposes only, and is not intended to be used for legal advice. Users of this website should not take any actions or refrain from taking any actions based upon content or information on this website. Users of this site should contact a licensed Texas attorney for a full and complete review of their legal issues.