Contract Glossary
Tortious Interference
Definition
Tortious interference occurs when a third party intentionally disrupts an existing contract or business relationship between two other parties, causing economic harm. There are two forms: tortious interference with contract (disrupting an existing agreement) and tortious interference with prospective business relations (preventing a deal from forming). To succeed in a claim, the plaintiff must prove the defendant knew about the relationship, intentionally interfered, the interference was improper, and damages resulted.
In Practice
A supplier has an exclusive distribution contract with Retailer A. A competing distributor, knowing about this exclusive arrangement, contacts the supplier and offers significantly better terms specifically to induce the supplier to break the exclusive deal with Retailer A. The supplier terminates the contract with Retailer A. Retailer A can sue the competing distributor for tortious interference with contract, the competitor intentionally and improperly caused the breach.
Example Clause
Each Party agrees not to intentionally interfere with the other Party's contractual relationships or prospective business relationships. In the event of a breach of this provision, the non-breaching Party shall be entitled to seek injunctive relief and recover damages, including lost profits and consequential damages, arising from such interference.
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