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What is tortious interference with a business contract?

Sometimes a business owner in Moorestown puts a lot of sweat and effort into creating the perfect contract with a customer, supplier or other business entity, only to have it interfered with by a third party. This frustrating situation is known as "tortious interference," and in some instances it can serve as the basis for a lawsuit.

"Tortious interference" refers to the intentional interference by a third party with another's business contractual relationship. While the laws vary by state, under certain circumstances a business owner can sue the third party for wrongfully interfering with his or her business contract or relationship with another party. One example of tortious interference is if a competing business convinced a business' customer to breach a contract he or she had with the business.

With regards to tortious interference with business relationships, a business owner usually must show that but for the interference, the business owner would not have incurred the economic damages he or she did due to the interference. Such damages may include a loss of profits.

If a business owner is successful with his or her tortious interference claim, he or she may be awarded actual or compensatory damages, depending on the amount of harm the business owner experienced. Expectation damages may be awarded based on the loss of profits or the loss of a business opportunity and the profits it would've derived. Punitive damages may also be an option for business owners who are able to prove emotional distress. In addition, the third party may be ordered not to have any contact with the business owner's customers or employees.

In some circumstances a business owner might want to sue for tortious interference if a third party company convinced one of the business owner's employees to quit and work for the third party. However, since most employment is "at-will" this type of tortious interference is difficult to prove, and some states do not recognize it altogether.

Forming contracts can be an essential component of running a business, so it is important that these contracts are not interfered with by competitors. Keep in mind that the elements of a tortious interference lawsuit and its accompanying damages vary based on state law. Therefore, it may help to consult with an attorney if you have questions about tortious interference, as this post does not contain legal advice.

Source: smallbusiness.chron.com, "The Definition of a Wrongful Interference in a Business Relationship," accessed Sept. 16, 2016

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