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Tortious Interference with a Contract or with Prospective Contractual Relations

Parties to a contract are entitled to performance of the contract without interference from others. Interference with a contract can lead to claims of tortious interference with performance of the contract or tortious interference with prospective contractual relations.

Tortious interference with the performance of contracts is defined in the Section 766 of the Restatement (Second) of Torts:

One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to a liability to the other for the pecuniary loss resulting to the other from the failure of the third person to perform the contract.

To prove a claim of torturous interference with the performance of a contract, the plaintiff must show that the defendant caused a third party not to perform a contract with plaintiff. It must be shown that defendant intentionally caused the lack of performance and did so improperly.

Tortious interference with prospective or anticipated contractual relations is defined in Section 766B of the Restatement (Second) of Torts as: “[I]nducing or otherwise causing a third person not to enter into or continue the prospective relation or (b) preventing the other from acquiring or continuing the relation.”

For a claim of tortious interference with prospective contractual relations, the plaintiff must prove that the defendant caused a third party not to enter into a contractual relationship with the plaintiff or prevented the plaintiff from entering into their relationship. The plaintiff must show that the defendant’s conduct was intentional and improper.

Determining whether a defendant’s conduct was improper is a critical issue in actions involving claims of tortious interference with performance of a contract or tortious interference with prospective contractual relations. In determining that improper conduct, the courts normally will keep in mind that an interest of the plaintiff in an existing contract may merit more protection than a less easily defined interest in a prospective or anticipated contract.

Seven factors listed in Section 767 of the Restatement (Second) of Torts are used to determine improper conduct of the defendant:

1. The nature of the defendant’s conduct.

2. Defendant’s motive.

3. The interests of plaintiff with which defendant’s conduct interferes.

4. The interests which defendant seeks to advance.

5. The social interests in balancing defendant’s freedom to act against the contractual interests of plaintiff.

6. The “proximity or remoteness” of defendant’s conduct relative to the interference claimed by plaintiff.

7. The relations between plaintiff and defendant.

A claim of tortious interference is more difficult to prove when the claim is made against a competitor. In order to protect competition, intentional interference with a prospective contractual relationship will not be considered improper if the relation involves competition between the defendant and the plaintiff, the defendant does not use “wrongful means,” and the defendant is not restraining trade but is seeking to compete with the plaintiff.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.

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