What Is Tortious Interference?

Tortious interference is a misdeed, or civil tort, in which someone unfairly gets in the way of a contract someone else has signed with a third party. Sometimes, such torts are a case of one company “poaching” talent from another.

You do not have to be in show business to be a victim of tortious interference or to be guilty of it. However, many Americans would rarely hear of this tort if it had not appeared in so many lawsuits in the sports and entertainment industries.

When someone does this, it’s more than just bad business: it’s a legal issue that could cost you money and damage your reputation. No one should be allowed to ruin the business relationships you’ve worked so hard to build. 

For over four decades, the team at Thorsnes Bartolotta McGuire has been helping honest and diligent business owners understand their rights and protect their enterprises. Don’t let others unfairly derail your hard work. Get in touch with a business litigation attorney at our firm online or by calling (619) 236-9363 today.

Tortious Interference Definition

Competition is a cornerstone of a free market, where businesses have the right to compete with one another in fair ways.  Each company tries to offer better products or services, attract the most customers, and forge strong business connections. 

However, when someone interferes with a deal or relationship that has already been established, whether by convincing a supplier to break a contract or by luring away employees, it’s illegal.

Tortious interference is a type of unfair behavior that happens when someone gets in the way of a business agreement or opportunity between two other people or companies. Whether you’re in retail, tech, or even a local bakery, tortious interference can affect any business.

For example, two bakeries can bid for the services of a great baker. But when a company interferes with the business dealings of another in a way that breaks even the free-wheeling ethics of the free market, it can be tortious interference.

Say one bakery already has a contract with the baker, and another bakery blackmails, threatens, or essentially bribes the baker to breach that contract. Perhaps the intent of luring the baker away was even to permanently shutter the contracting bakery.

That sounds like unfair competition and possibly the basis of a successful lawsuit. Note that both the first bakery (with the fair contract) and the blackmailed baker might file a lawsuit against the interfering bakery.

There are two distinct types of tortious interference: tortious interference with a contract and tortious interference with prospective economic damage. It’s important to understand the differences between the two as they involve different legal requirements and can lead to different types of harm to your business. 

What Is Tortious Interference With A Contract?

This form of tortious interference involves a third party intentionally disrupting a contract that already exists between your business and another. For this to occur, you must have had a pre-existing contract or business agreement.

A third party may undermine a contract in several ways, including: 

• Convincing one of the parties involved in the contract to break it by offering a better deal.
• Making threats.
• Using bribery.
• Spreading false information or applying pressure to create doubts, leading the other party to back out of the agreement.

A business attorney will have to demonstrate the following elements in order to prove this form of tortious interference: 

• There was a valid, existing contract between you and the other party.
• The third party knew about the contract or should have known about it.
• The third party intentionally caused the other party to break or disrupt the contract.
• You suffered harm (financial loss, damage to reputation, etc.) as a result of the interference.

Furthermore, in some circumstances, you can still take legal action if you are in the process of negotiating a contract that would benefit your business and a third party interferes with this potential contract.

Running a business is tough, especially in today’s economic climate. You’re already juggling deadlines, clients, and a million other responsibilities. The last thing you should have to worry about is losing a valuable deal or partnership because someone else decided to play dirty. 

If another party’s illegal or unethical actions caused your deal to fall through, you don’t have to just accept it. You may have legal options, and protecting your hard work starts with knowing your rights. Contact Thorsnes Bartolotta McGuire online or by calling (619) 236-9363 today to discuss whether tortious interference has harmed your business.

What Is Tortious Interference With Prospective Economic Advantage?

Not all cases of tortious interference involve existing contracts. Sometimes, tortious interference can happen even when there’s no signed contract, but the interference still disrupts a potential business opportunity. 

This type of interference is known as tortious interference with prospective economic advantage. It occurs when one party deliberately harms another’s chances of securing a future deal, contract, or business opportunity that they were actively working towards.

Even though there’s no formal contract in place, the potential deal or relationship was valuable enough that your business had a reasonable expectation of future economic gain. To prove this type of tortious interference, your attorney will need to show the following: 

• There was a valid business expectancy or potential opportunity.
• A third party was aware that you were pursuing this business opportunity.
• This third party took deliberate and wrongful actions to disrupt this potential deal.
• You experienced financial harm or other losses as a result of the interference.

What Is Considered Improper Conduct From a Third Party?

For interference to be considered wrongful, the third party’s behavior must go beyond normal competition and cross into actions that harm or disrupt a business opportunity or relationship in an unlawful way.

Here are examples of what can be considered improper conduct:

• Providing false information or misrepresenting your business to convince the other business to back out of the contract or potential deal.
• Coercing the other business to break the contract through financial incentives, gifts, threats, or intimidation.

In addition to the nature of the conduct, an attorney will also have to consider other factors such as the third party’s potential motives or underlying interests, how much their actions actually influenced the other business backing out of your contract or future agreement, and the relationship between your business, the third party, and the other business.

An Old-Time Show-Business Fight Sets a Precedent for What Is Tortious Interference?

The very idea of tortious interference was first enshrined in the law when two theater owners went to court over a singing sensation.

In 1853, Johanna Wagner signed a contract with Queen’s Theatre to do a string of London performances. However, Covent Garden Theatre convinced her to break that contract by offering her more money.

The Queen sued Covent Garden for wrongfully interfering with the contract. The Queen won, Covent Garden paid up, and tortious interference has been a common fixture of tort law ever since.

Modern Day Example of Tortious Interference Claim

In 2019, Fox Studios claimed Netflix had induced or poached two Fox executives away from their contracts. Netflix raised the heat by claiming Fox’s contracts with the executives had amounted to involuntary servitude, violating California’s public policy and statutes.

In the end, Netflix agreed to stop poaching and did not pursue the involuntary servitude accusation. In return, Fox did not pursue the lawsuit for tortious interference.

Thorsnes Bartolotta McGuire Stands Up for Business Owners

Running a business is hard enough; don’t let tortious interference make it harder. At Thorsnes Bartolotta McGuire, we’ll protect what you’ve built.

When someone else’s wrongful actions threaten your contracts, revenue, or business relationships, the stakes couldn’t be higher. For over 40 years, Thorsnes Bartolotta McGuire has been the trusted advocate for businesses facing serious legal threats like tortious interference. We understand the pressure you're under and the risks you’re up against.

You should be able to focus on the growth of your business, and we’ll make sure nothing stands in your way. Call us today at (619) 236-9363, or fill out our quick online form to protect your business.