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What's tortious interference in a business?

What's the difference between a healthy competition between rival companies and an unfair business practice called tortious interference?

One promotes innovation and encourages a thriving market -- while the other can land you in an ugly lawsuit.

Tortious Interference Basics

Tortious interference is an intentional sabotage on the part of a business toward one of its rivals -- achieved by actively seeking to either lure or force a third party into somehow violating an existing contract with that rival company.

For example, imagine that you're a car dealer who specializes in used cars. You make a deal with a customer who is starting a car rental business to provide 10 used cars as soon as the customer gets financing. Everything seems to be going along fine until a competitor gets wind of the newly-formed car rental business and manages to kill your deal by convincing the new businessman that you're trying to sell him a bunch of cars that have flood damage for twice their value.

One common type of tortious interference involves convincing a rival company's employee to jump ship and promptly violate an existing nondisclosure agreement by giving away proprietary information, like a confidential client list or plans for an innovative development.

Tortious Interference Lawsuits

A claim of tortious interference has to rise from actual economic damages that you've suffered as a part of your rival's actions. In addition, you have to be able to prove that the defendant knew about your contract and intentionally and improperly interfered with that contract.

The target of your lawsuit, in this case, isn't the third party that actually broke the contract with you but the rival company that encouraged or pushed that third party into his or her action. You may end up suing the customer or former employee in a separate breach of contract case, but it may also not be really possible to recover your economic damages that way. A tortious interference lawsuit essentially helps put the liability for your losses on the party with the deepest pockets.

Business litigation is an exceptionally complicated area of law -- don't go it alone in court. If you've been the victim of tortious interference, an attorney can provide advice on how to proceed against the responsible party.

Source: FindLaw, "Tortious Interference," accessed July 19, 2017

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