Uncategorized

What Is Tortious Interference With A Business Relationship?

By July 8, 2021 No Comments
tortious-interference-business-relationship-600x350-1690d251

When a business owner enters into a formal or informal agreement that will benefit their company, they do not usually expect an outside party to interfere with that relationship. Business owners depend on relationships and contracts with insurers, lenders, vendors, distributors, and contractors to successfully run their businesses. If a third party interferes with a contract or business relationship, it can be devastating to a business’s bottom line. Some examples of interference may include convincing a shared supplier to renege on a contract or a third party interrupting the sale of property to a business. If a third party unfairly interferes with a business contract or relationship, there is a legal remedy available in the form of an action known as tortious interference.

There are currently no criminal laws that exist to punish business competitors who harm you by purposely interfering with your business relations. The remedy for this is found in state contract and tort law. Contract law specifically applies to claims between parties that already have a pre existing agreement. A tortious interference claim can apply to the acts of a business or individual with which you do not have an agreement. The focus of a tortious interference claim is to remedy the wrongful conduct of a non-party to an existing contract or other type of business relationship.

Two types of business relationships can be subject to interference by a third party:

  1. Interference with existing contract relationships
  2. Interference with prospective economic advantage

The first relies on the existence of a business agreement or contract. The second is a more informal relationship that could create an expectation of economic advantage. When a contract already exists and a third party wrongfully interferes with it, the following elements will have to be proven for a tortious interference claim to proceed:

  • A contract existed between the business and another individual or business
  • The contract was valid
  • An outside (third) party had knowledge of this contract
  • The outside party purposefully and wrongfully disrupted the contractual relationship
  • The outside party’s interference with the contract caused harm to the relationship

The situation is a bit different when a formal contract is not involved. A business may be in the middle of negotiating the terms of a contract that would result in an increase in revenue. If an outside party interferes with the negotiation process and the contract is subsequently taken off the table, the business may have a claim against that outside party. For interference with prospective economic advantage, the following elements must be proven:

  • The business had a relationship with another business or individual
  • An outside (third) party knew this relationship existed
  • The outside party purposefully and by wrongful means disrupted that business relationship
  • The outside party’s interference with the business relationship caused harm

Improper conduct by an outside party that affects business relationships and/or contractual agreements can include:

  • Economic pressure
  • Fraud
  • Misrepresentation
  • Initiating lawsuits (civil or criminal)
  • Threats and physical violence
  • Breach of fiduciary duty

Some of the above acts may be considered “independently tortious” in Texas when it is the type of action that an individual could be sued for under tort law. The determining factor in the claim will be if the third party’s actions were improper, depending on the third party’s motivations as well as how direct or indirect their behavior was to the interference. It may also depend on the interests of the third party and whose agenda the third party is attempting to advance. If there was a pre-existing relationship between the business and the third party, and the third party had motivation to harm the business, that will be taken into account as well.

Tortious Interference Damages

As the victim of tortious interference in Texas, there are different types of losses you may be able to recover. Expert testimony may be required for some types of damages; however, an experienced attorney will have the resources needed to hire the experts needed to prove your case. Some of the damages that can be awarded for tortious interference in a business relationship include:

  • Economic Loss: Financial losses the business has documented.
  • Profit Loss: Anticipated profits that were lost as a result of interference in a contract or business relationship.
  • Punitive Damages: Damages awarded to punish a defendant and serve as an example to others to stop them from doing the wrong thing.

Houston Business Lawyers

In Texas, there is a statute of limitations that limits the amount of time you have to file a lawsuit related to tortious interference. You have two years from the day the alleged interference with a contract or business relationship occurred. Hiring an experienced business attorney will be critical to a successful outcome in your case.  If someone has attempted to interfere in your business relationships, you should speak with an experienced commercial litigation attorney as soon as possible to learn more about your legal rights and remedies.