What is Tortious Interference
Tortious interference is a civil law claim in which a third party intentionally interferes with another person or company's existing or prospective business contracts and relationships, causing economic harm — giving the injured party grounds to sue for damages.
Tortious interference (also called tortious interference with contract or tortious interference with business relations) is a civil legal claim in which one party intentionally and improperly interferes with another party's existing contractual relationship or prospective business relationship, causing economic harm. The person or company that was interfered with can sue the interfering party for compensatory damages.
It is a business tort — one of the primary legal remedies for unfair competitive conduct that doesn't rise to the level of fraud or breach of contract (since the wrongdoer typically isn't party to the contract).
Two Types of Tortious Interference
1. Tortious Interference with Contract (Existing Relationship)
The most clearly actionable type: the plaintiff had an existing, enforceable contract with a third party, and the defendant knew about it and intentionally caused the third party to break it.
Elements (vary by jurisdiction but typically include):
- A valid contract existed between the plaintiff and a third party
- The defendant had knowledge of the contract
- The defendant intentionally induced the third party to breach the contract
- The breach actually occurred
- The plaintiff suffered damages as a result
2. Tortious Interference with Prospective Business Relations/Advantage
Broader and harder to prove: the defendant interfered with a prospective economic relationship or deal that hadn't yet been contracted.
Additional requirement: In most jurisdictions, the defendant's conduct must have been improper — wrongful by some measure beyond merely competing (fraud, misrepresentation, threats, illegal means, or highly unethical conduct).
Examples
Interfering with contract: Company A has an exclusive supply contract with Company B. Company C learns about the contract, approaches Company B, and persuades them to breach the contract and supply to Company C instead by falsely claiming Company A defrauded them. Company A can sue Company C for tortious interference with contract.
Interfering with prospective deal: A real estate developer is close to finalizing a deal to purchase property. A competitor spreads false rumors to the seller that the developer is financially insolvent, causing the seller to cancel negotiations. The developer could claim tortious interference with prospective business relations.
Competitor poaching: A company sends targeted offers to a competitor's employees under long-term contracts, inducing them to quit in breach of those contracts — potentially tortious interference.
What Is NOT Tortious Interference
Competition itself is not tortious interference. Legitimate competitive activity — offering better prices, superior products, or attractive alternatives — is not improper even when it causes someone to lose business.
Key distinctions:
- Price competition: Offering to sell at a lower price than a competitor is not tortious interference
- Better product: Winning a customer by offering a superior service isn't tortious interference, even if an existing contract allows termination
- Truthful communication: Saying true things about a competitor's product is generally protected
- Employee solicitation (of at-will employees): Generally not tortious interference; different analysis for employees under fixed-term contracts
The improper conduct element requires something beyond just competing — it must involve wrongful means (lies, threats, bribery, unlawful conduct) or achieve an improper objective.
Damages in Tortious Interference Cases
Plaintiffs can recover:
- Lost profits: Economic losses directly caused by the interfered-with contract or relationship
- Lost business value: Where interference caused lasting damage to business relationships
- Consequential damages: Other foreseeable economic harms flowing from the interference
Courts may also award punitive damages in cases involving egregious, intentional misconduct.
Proving tortious interference requires documentation of the existing relationship, evidence of the defendant's knowledge and intentional conduct, and quantification of economic damages — making it important to work with experienced business litigation counsel when pursuing or defending against such claims.