Competition between businesses can be fierce, and can take many forms.  Some of these forms are fair and legal, while some are not.  When one entity or individual interferes with another’s contractual or business relations, the injured party may have a claim for tortious interference.

What is tortious interference?

The Pennsylvania Supreme Court has noted that, in general, an entity or individual has the right to pursue its business without interference from others, except where interference is justified or constitutes the exercise of an absolute right.  (See Walnut Street Assoc. Inc. v. Brokerage Concepts, Inc., (Pa. 2011).)  Tortious interference, sometimes also known as intentional interference with contractual or business relations, is a common law tort claim permitting a plaintiff to recover damages against a defendant for intentional and wrongful interference in the plaintiff’s business with a third party. 

To prove intentional interference, the plaintiff must show that:

1. A valid contract existed between plaintiff and a third party;
2. The defendant knew about the contract;
3. The defendant acted intentionally and improperly; and
4. The defendant’s actions caused the plaintiff to suffer injury.

Examples of tortious interference

Not all actions that interfere with business or contractual relations are improper.  Some factors that courts look at to determine whether interference in a particular case is wrongful include:

• The kind of conduct the defendant engaged in;
• The defendant’s motives;
• The defendant’s interests;
• The interests of the third parties involved;
• The social interests in protecting the defendant’s freedom of action versus the plaintiff’s contractual relations;
• Whether the defendant’s conduct is closely related to the interference; and
• The relations between the parties.

A tortious interference claim might exist, for example, if a competitor persuades your client or customer to breach a contract with you, or hires one of your employees to come work for them, in breach of an employment agreement.  As another example, if a competitor lures your customer away through false or misleading allegations about the quality of your product or your business practices, you would have a cause of action against them.

Defenses to a tortious interference claim

Various privileges constitute a defense to a tortious interference claim.  One of these privileges is the privilege to engage in fair competition.  In addition, if the defendant gave a third party truthful information which then caused the third party to back out of its contract with the plaintiff, defendant may not be liable.

Damages for tortious interference

Damages available for tortious interference include:

• Actual financial losses;
• Loss of profits;
• Punitive damages; and
• Injunctive relief.

Consult a Philadelphia business attorney

If you believe you may have a claim for tortious interference with a contract or business relations, reach out to the experienced business attorneys of The Kim Law Firm, LLC.  We have litigated cases in courts throughout Pennsylvania and the rest of the country, and have represented big and small companies in complex commercial controversies of all types.  We offer the skills, knowledge, dedication and aggressiveness to help our clients succeed. Contact us for a consultation today.