What Is Tortious Interference with a Contract?

You work hard to build strong business relationships and fulfill your contracts. You should be able to expect that your hard work is not unlawfully undermined.
Attorney Headshot

Article By: Marc Newman

A Leading Commercial Litigation Attorney in Michigan

What Is Tortious Interference with a Contract?

Published on: May 25, 2020

What-Is-Tortious-Interference-with-a-Contract But what happens if someone actively works to undermine your efforts or steal your opportunities for themselves?

This kind of behavior is recognized as tortious interference in Michigan, and you have remedies.

If you believe your business has been the victim of tortious interference, you should contact an experienced commercial litigation attorney.

We can assess the facts of your case and help you determine whether you have a claim.

What Is Tortious Interference?

There are two types of tortious interference: tortious interference with contract and tortious interference with prospective economic advantage. Both involve situations where one party does something to intentionally undermine another party’s business transactions or relationships. The primary difference between the two is whether a contract exists.

Tortious Interference with Contract

Tortious interference with a contract occurs when someone improperly induces a breach of contract between you and a third party. For example, let’s say you have a contract to sell 100 widgets to Company A. But Company A has many lucrative contracts with Company B. Company B is considering branching out into widget manufacturing and wants to eliminate the competition. So Company B threatens to stop doing business with Company A unless Company A breaches its contract with you. You may have a claim against Company B for tortious interference.

Tortious Interference with Prospective Economic Advantage

This second type of tortious interference occurs when a third party improperly interferes with a business relationship or an expected business transaction. For example, let’s say that you casually mention to a fellow business owner that you are in negotiations to lease a new building. You tell them how excited you are about the advantages this new location will bring to you.

This person then contacts the owner of the building and tells them how desperate you are to be in this location and that you will likely pay much more than they are asking. This leads the building’s owner to drastically increase their asking price. This may also give you a claim for tortious interference.

What Are the Elements of Tortious Interference with Contract?

To prove tortious interference with a contract, a plaintiff must establish several elements:

  • The plaintiff had a contract with a third party;
  • The defendant knew about the contract at the time of the alleged interference;
  • The defendant interfered intentionally;
  • The interference was improper;
  • The defendant’s conduct led to a breach of the contract; and
  • The plaintiff suffered damage as a result.

If you can establish these elements, you will be entitled to damages for losses you sustained as a result of the broken contract.

What Are the Elements of Tortious Interference with Prospective Economic Advantage?

To prove tortious interference with prospective economic advantage in Michigan, a plaintiff must show:

  • The plaintiff had a business relationship or expected to establish one with a third party;
  • The relationship or expected transaction was reasonably likely to benefit the plaintiff financially;
  • The defendant knew about the relationship;
  • The defendant intentionally interfered with the relationship;
  • The interference was improper;
  • The defendant’s conduct caused the third party to disrupt or terminate the relationship; and
  • The plaintiff suffered damage as a result.

This claim can be more difficult to prove than interference with a contract. You have to show that the advantages you expected to gain from the relationship were realistic. For example, you could show that you had regularly conducted similar business transactions with the third party in the past and expected your relationship to continue in a similar vein.

On the other hand, you may struggle to establish your claim if you merely had a plan to approach a third party about negotiating a contract but had not yet taken steps to do so.

What Constitutes Intentional Conduct?

Both types of tortious interference require proof that the conduct was intentional. This requires proof that either:

  • The primary purpose of the defendant’s conduct was to cause the breach of contract or interfere with the business relationship or expectation; or
  • The defendant was substantially certain that this would be the result of their conduct.

Careless or reckless conduct is not sufficient to establish tortious interference.

How Do You Prove That Interference Was Improper?

There is a fine line between tortious interference and fair competition. Tortious interference under Michigan law requires proof not only that the conduct was intentional but that it was improper. Michigan courts are instructed to consider several factors in determining whether conduct is improper, including:

  • The nature of the conduct;
  • The defendant’s motives and interests;
  • The plaintiff’s interests;
  • The balance between society’s interest in protecting the conduct at issue and protecting contracts, business relationships, and expectations;
  • How much the conduct actually influenced the breaching party; and
  • The nature of the relationships between the defendant, plaintiff, and third party.

The defendant will try to prove that they were simply being competitive. Having an experienced attorney on your side can go a long way toward helping you show that the conduct was improper.

Contact an Attorney

If you believe you have suffered tortious interference in Michigan, contact Miller Law today.

We have extensive experience litigating business matters in both state and federal courts throughout the country. We represent businesses of all types and sizes, and we can help you too. Call or contact us online to schedule a consultation, and let us help you determine if you have a case.

Leave a Reply

Your email address will not be published. Required fields are marked *