Tortious Interference
A tort claim arising when a third party intentionally disrupts an existing contract or prospective business relationship without justification.
While straightforward in theory, many businesses fail to actively track obligations tied to this concept - often resulting in missed deadlines, unintended renewals, penalties, or loss of contractual rights.
US Law · For business owners and foundersWhat is a Tortious Interference?
Tortious interference occurs when a third party - someone not a party to a contract - intentionally and improperly induces another party to breach that contract or prevents a party from performing their contractual obligations, causing damage to the other contracting party.
There are two main forms: (1) tortious interference with an existing contract, which requires an actual contract between parties; and (2) tortious interference with prospective economic advantage or business relations, which covers interference with anticipated business dealings that have not yet become contracts.
Not all interference is tortious. Courts require the interference to be "improper" - meaning the defendant used wrongful means (fraud, threats, bribery) or acted with an improper motive. Legitimate competition, including offering better terms to lure customers away, generally does not constitute tortious interference.
In practice, many teams rely on a contract expiry tracking system to stay on top of dates and obligations tied to clauses like this.
Key Elements
Existence of a Contract
The plaintiff must prove a valid, enforceable contract (or prospective business relationship) existed at the time of interference.Knowledge of the Contract
The defendant must have known (or should have known) of the contract or business relationship.Intentional Interference
The defendant must have intentionally acted to disrupt or prevent performance of the contract.Improper Conduct
The interference must have been through improper means or with an improper motive - mere competition is not enough.Resulting Damage
The plaintiff must have suffered actual damages - lost profits, additional costs, or other harm - as a direct result of the interference.Real-World Example
Company A has an exclusive distribution contract with a manufacturer. Company B, knowing about this exclusive contract, secretly approaches the manufacturer and offers a higher commission to divert production away from Company A, causing the manufacturer to breach the exclusive agreement.
Company B is liable for tortious interference with contract. Company B knew of the existing exclusive contract, intentionally induced the breach, and used improper means (secretly undermining an exclusive relationship). Company A can sue Company B for lost profits and other damages resulting from the breach.
This is why many businesses adopt automated deadline tracking to ensure no critical dates are missed before they pass.
Sample Clause Language
Non-Interference ProvisionWatch Out For
At-Will Employees
Courts are split on whether tortious interference claims apply to at-will employment contracts. Some jurisdictions do not allow such claims for at-will relationships.Competitor Privilege
Honest competition - such as offering lower prices or better terms to attract customers - is generally privileged and does not constitute tortious interference, even if it causes a party to breach a contract.Document Business Justifications
If your business actions might appear to interfere with a competitor's contracts, document your legitimate business justifications carefully to defend against potential claims.Don't let tortious interference deadlines catch you off guard
Key dates tied to tortious interferences - renewal windows, expiry cutoffs, notice periods - can easily slip through the cracks when tracked manually. Missing them triggers automatic extensions, penalties, or lost rights. ExpiryEdge tracks every critical deadline and sends automated reminders before they're due - so nothing slips.
Instead of relying on spreadsheets or manual follow-ups, a centralized renewal reminder system ensures every deadline is visible, tracked, and actioned automatically.
How to Use This in Your Favor
Include Non-Solicitation Provisions
Non-solicitation clauses contractually protect key relationships and strengthen any tortious interference claim if a competitor violates them.Publicize Exclusive Arrangements
Making exclusive arrangements known to the market (through public filings, press releases, or notices) helps establish third-party knowledge - a required element of any tortious interference claim.Related Terms
Frequently Asked Questions
Can an employee be liable for tortious interference with their employer's contracts?
Generally, employees acting within the scope of their employment are not personally liable. However, an employee who acts outside their authority for personal gain can face personal liability.
What damages are available?
Compensatory damages (lost profits, costs incurred), consequential damages, and in egregious cases, punitive damages. Courts may also award attorneys' fees in some jurisdictions.
How is this different from breach of contract?
Breach of contract is a claim against the contracting party who failed to perform. Tortious interference is a tort claim against a third party who caused that breach.