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Understanding Tortious Interference With a Contract

Business and Commercial Disputes By Harvey Binnall PLLC - 2021/02/12 at 03:48pm

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Businesses often use their influence to disrupt competitor’s contracts and gain an advantage in the market.  This sort of behavior is known as “tortious interference with contract” and is prohibited by law — if you have lost a contract as a result of such conduct, you may be entitled to sue and recover damages.

Business tort litigation can be quite a challenge, however, so it’s important to understand the basics.

How Does a Tortious Interference Claim Work?

Tortious interference with a contract occurs when a third-party causes a breach of contract as a result of their interfering conduct.  To establish tortious interference, the plaintiff must show that:

  1. There was a contract;
  2. The defendant was aware of this contract;
  3. The defendant interfered with this contract intentionally and improperly; and
  4. The plaintiff suffered damages as a result.

It can be difficult to understand what tortious interference is in real-world terms, so consider this example.  Suppose that a business (A) enters into a contract to supply services to another business (B).  An existing business-partner of business B demands that business B cancel that contract and give the contract to them instead — they threaten not to work with business B again if the contract with business A continues.  This would be considered tortious interference with the contract.

Improper and Intentional Interference

Not all interference is “tortious” — the interference must be improper and intentional to justify a claim against the defendant.  In other words, the defendant must have primarily intended for their conduct to cause a breach of contract.  Proving the improper nature of the defendant’s conduct can be quite challenging.

For example, suppose that you regularly do business with a company (A), supplying a variety of goods to them.  That company then enters into a contract with another company (B), looking for a supply of a particular item.  Without you being aware, however, company A decides that your product is more competitive (price, quality, etc.), and cancels their contract with company B to enter into a new contract with you.

Despite the fact that company B lost their contract, and despite the fact that your business “interfered” with their contract in a passive manner (by simply existing), that interference was not intentional or improper.  As such, company B would not be able to successfully bring a tortious interference claim against you.

Speak to an Alexandria Business Litigation Attorney at Harvey & Binnall, PLLC for Immediate Assistance

Harvey & Binnall, PLLC is a boutique commercial litigation firm based out of Alexandria, VA, and representing clients throughout the DC metro region.

We advocate on behalf of clients in a range of business disputes, including those centering around tortious interference with a contract (and tortious interference with a prospective contract).  These situations can be quite frustrating, and it’s important to have an experienced ally by your side as you navigate these challenging waters.

If you’d like to speak to an experienced Alexandria business litigation attorney at our firm, we encourage you to call us at (703) 888-1943 or send us a message online to request a consultation at your earliest convenience.