When a company tries to economically damage a competitor through interference with an existing business contract, relationship, or prospective economic opportunities, this is known as tortious interference.
Court have recognized two types of tortious interference claims: (1) tortious interference with a contract; and (2) tortious interference with a business relationship or prospective economic advantage (where no contract exists but the plaintiff had a reasonable expectation of economic benefit).
To establish a claim for tortious interference with contract, a plaintiff must show:
- That a contract existed between the plaintiff and a third party;
- That the defendant was aware of the existence of that contract;
- That the defendant intentionally interfered with the contractual relationship, which caused the contract to be breached;
- That the conduct by the defendant was improper; and
- That the plaintiff suffered economic damages due to the breach or termination of the contractual relationship.
Not all competitive activity can be considered tortious. One of the most important (and challenging) elements in proving a tortious interference claim is that the conduct by the defendant was improper. Section 767 of the Restatement (Second) of Torts list seven factors used to determine improper conduct:
- The nature of the defendant’s conduct.
- Defendant’s motive.
- The interests of plaintiff with which defendant’s conduct interferes.
- The interests which defendant seeks to advance.
- The social interests in balancing defendant’s freedom to act against the contractual interests of plaintiff.
- The “proximity or remoteness” of defendant’s conduct relative to the interference claimed by plaintiff.
- The relations between plaintiff and defendant.
Tortious interference claims can be difficult to prove, and you need the help of an experienced business litigation attorney in order to properly make or defend a claim. There are some common defenses to tortious interference, which include:
- The defendant was unaware of a contract existed between the plaintiff and third party.
- No contract was in effect at the time of the defendant’s alleged improper conduct.
- A breach of contract did not occur.
- A breach would have occurred regardless of defendant’s conduct.
- The defendant did not intend for the conduct to interfere with a contract.
- There was a legal justification or privilege for the defendant’s actions.
The statute of limitations for most tortious interference claims in Arizona is two years. If a claim is proven, damages can be economic and punitive. It is also possible for a winning plaintiff to receive equitable relief, where the court prevents a defendant from realizing any economic gain from the wrongful actions.
When business disputes arise, you need experienced legal representation and advice. Williams Commercial Law Group, L.L.P., is a law firm focusing on contract disputes, and business divorce. Contact us at (602) 256-9400 and schedule a time to meet with us today.