All's Fair in Love and War... and Business? Tortious Interference with Contract or Business
We've all been taught that American business is built on the concept of competition and free enterprise. At the same time, we all have a deep-rooted metaphysical sense of "fairness" which sets the outermost limits on where we are willing to let "pure" competition go. Where that line goes is what "tortious interference" with business or contract is all about. In essence a "tortious interference" claim is about saying that a competitor in the marketplace misused information or otherwise just went "over the line" when it came to the tactics used to solicit clients, obtain business that the complaining plaintiff believes should rightfully have been his, cause customers to stop patronizing another's business, or otherwise adversely affect the competitor's business and/or financial prospects.
The tort of "tortious interference", whether with "contract" or with "a business relationship", is one of the most common claims made in business disputes. It is often seen in tandem with allegations of misappropriation of trade secrets, breach of confidentiality or non-compete provisions, or defamation claims. The difference between the two flavors of tortious interference is that "tortious interference with CONTRACT" requires the wrongdoer to have impermissibly adversely affected an ACTUAL formal contract in place between the complaining plaintiff and another entity; "tortious interference with BUSINESS or BUSINESS RELATIONSHIP" is broader and includes intentional interference by the wrongdoer with business dealing of the complaining plaintiff with another entity which may not yet have resulted in a contractual relationship.
Tortious Interference with Contract. In Ohio, the Ohio Supreme Court recognized the existence of a claim of tortious interference with contract in Kenty v. Transamerica Premium Ins. Co., 72 Ohio St.3d 415 (1995). It joined a number of other states in adopting the definition set forth in the Restatement of the Law 2d, Torts:
One who intentionally and improperly intereres with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract is subject to liability to the other for pecuniary loss resulting to the other from the failure of the third person to perform the contract.
To prevail on a claim alleging tortious interference with contract, you must show all of the following:
- the existence of a contract
- defendant's knowledge that contract existed
- defendant wrongdoer's intentional interference and procurement of breach of contract
- defendant wrongdoer's lack of justification for his actions
- damages resulting from contract breach
The contract interfered with can be express or implied. It does not have to be a written agreement.
Tortious Interference with Business Relationship. Ohio law also recognizes claims for tortious interference with a business relatinship applicable when there may not have been a specific contractual relationship. A&B-Abell Elevator Co. v. Columbus/Cent. Ohio Bldg. & Constr. Trades Council, 73 Ohio St.3d 1 (1995). Here, one must show:
- existence of a business relationship
- defendant's knowledge of the business relationship
- defendant wrongdoer's intentional interference causing a breach or termination of the relationship
- damages resulting from wrongdoer's actions
In both cases, the wrongdoer must have acted intentionally and the interference must have been without justification. To determine whether the defendant acted improperly, the Ohio Supreme Court set down the following factors in Fred Siegal Co,, L.P.A. v. Arter & Hadden, 85 Ohio St.3d 171 (1999):
- nature of the defendant's conduct
- defendant's motive
- business interests of the complaining plaintiff which were interfered with
- interests sought to be advanced by the defendant
- weighing of the social interests in protecting the defendant's freedom of action versus protecting the plaintiff's business and contractual interests
- proximity of defendant's actions to the alleged damages caused
- relations between the parties.
