Tortious Interference with Business Relationships
Pesky things happen at every corner of this journey called life. Like in personal injury cases, businesses can also suffer damages -economic damages-arising from someone’s negligence or malicious actions. When this happens, the affected entity can seek just compensation under the principle of Tortious Interference.
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What Is Tortious Interference?
Tortious interference happens when someone interferes with your business or contractual relationship with another person or business, leading to economic damage.
Tortious interference with contract example
Someone uses their influence to force a contractor to break an agreement. They could also interfere with your ability to fulfill a contract by refusing to supply goods or doing so in time.
At Hess-Verdon, our doors are open any time you wish to discuss your tortuous interference matters. We are ready to fight for or defend your interests.
What are the Laws That Govern Tortious Interference?
No criminal laws exist to punish business competitors who cause you losses by interfering with your economic relationships. The only approach for seeking just compensation, in this case, is via the state tort laws.
A majority of claims in the civil court fall under tort law. This is an area of the law concerned with redressing wrongs done to people to provide them relief from the damaging “wrongful” actions of others. Tort law does that by rewarding plaintiffs with monetary damage compensation in full for proven harm.
Tortious interference with business claims that involve contracts may, in theory, be determined under contract law. Practically they fall back to tort law for the fact that the plaintiff doesn’t have an agreement with the third party – the accused.
Elements for Tortious Interference Claim in California
In California, Tortious interference is also known as economic interference and allows for damage compensation for all acts, negligent or intentional, that harm business relationships and lead to economic damage.
An “intentional” tortious interference claim requires evidence that the accused intended to cause the alleged damage to the plaintiff. Or, at least, it should prove that the accused knew that their actions were likely to cause harm.
A “negligence” tortious interference claim requires the plaintiff to prove that the defendant owed them a specific duty of care and that they breached it, causing measurable harm.
Intentional Interference with Prospective Economic Advantage (IWPEA)
Business relationships may not always require written contracts. Say your company has been negotiating to buy a promising startup that you believe will double your revenues and accelerate growth. If a person knowingly interferes with this future business relationship, you will have grounds to sue them for damage compensation.
The elements of Intentional IWPEA claims include:
· You had a business relationship-real or prospective-with another party
· The defendant knew of that relationship
· The defendant intentionally interfered with that business relationship
· Their wrongful interference caused quantifiable economic harm
Negligent Interference with Prospective Economic Advantage
Negligent IWPEA claims have plenty in common with intentional IWPEA claims. The only difference, in this case, is that the defendant did not know about that the economic relationship. The plaintiff will be required to prove that the defendant should have known about the business relationship and the consequences of their actions.
Interference with a Contractual Relationship
The legal action requires that there should be a business contract and proof that the third party wrongfully interfered. There are two types of interference with contractual relationships – intentional or negligent.
Intentional Interference with Contractual Relationship (IWCR)
Intentional IWRC claims must have the following elements:
· A valid contract for the business relationship in question
· The defendant knew about the existence of this contract
· The defendant intentionally and wrongfully interfered with that relationship
· That wrongful interference caused economic harm
Negligent Interference with a Contractual Relationship
These cases involve a negligent party unknowingly causing you to breach your contract. Negligent IWCR is not recognized in California. Fifield Manor v. Finston, 54 Cal.2d 632 (1960).
Induced Breach of Contract
If you encourage a job candidate to break an agreement with their employer to start working for you – you may be found liable for Induced Breach of Contract. IBC is another form of Tortuous Interference with business relationships. If a company manager resigns and takes your team with them-you as the employer will have grounds to sue them (the manager) for IBC.
IBC has all the elements of Intentional Interference with Contractual Relationship (IWCR). However, the plaintiff must show that the actions of the defendant caused the breach of contract. You will also have to prove that the defendant knew about the relationship and the possible consequences of their actions.
Hess-Verdon assists business owners in all aspects of business law in California. Let us defend or fight for your interests. Contact us (949) 706-7300
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