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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Frequently asked questions about tortious interference
Legitimate competition is legal and expected — offering better products, prices, or services to win business. Tortious interference crosses the line when someone targets an existing contract or relationship with the specific intent to disrupt it through improper means (fraud, threats, bribery, or inducing breach of contract). Advertising lower prices is competition; calling someone's client and making false claims about their work quality to steal the account is interference.
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Create your contractThis content is for informational purposes only and does not constitute legal advice. For contracts with significant financial or legal implications, review by a qualified attorney is recommended.