12. What is the “intentional interference with economic relations”?
This is a tort based in common law rather than statute. There are several categories of conduct that may violate common law rights of individuals:
• Disparagement – This is an untrue statement about someone’s business acumen, product, or service. This tort may be addressed as defamation; however, some states lack a statute or common law protecting commercial rights against defamatory statements.
• Interference with Contractual Relations – This tort occurs when a non-party to a contract knowingly induces a party to the contract to fail to honor or breach the agreement.
⁃ Example: This situation often arises when one company raids another for employees. The raiding company knowingly induces employees to breach their employment contracts with their current employer.
• Interference with Perspective Advantage – This cause of action entails a situation in which there is a business relationship between the plaintiff and a third party. The defendant then acts in a way intended to disrupt the relationship. This conduct is done not for personal advantage but with the purpose of harming the plaintiff. The plaintiff may bring an action to recover the losses or damages sustained.
⁃ Example: A third party intentionally creating distrust between a supplier and vender to harm the vendor may constitute an illegal interference.
• Wrongful Appropriation of Business Interests – This tort arises when a fiduciary breaches the duty of loyalty and appropriates someone else’s intellectual property rights, such as patent, trademark, copyright, trade secret, or good will.
⁃ Note: This type of conduct is often addressed in non-compete and non-disclosure agreements. These agreements establish a contractual right. This is in addition to any common law rights to seek redress in tort for such conduct.
⁃ Example: An employee downloading an employer’s client list (that is a trade secret) with the purpose of opening her own business would constitute wrongful appropriation.
• Discussion: How do you feel about the tort of intentional interference with contractual relations? Does the tort conflict with valid business practice? Why or why not? Who do you think this cause of action is meant to protect?
• Practice Question: ABC, Inc., is a competitor of 123, Inc.? ABC knows that 123’s contract with Supplier Corp is instrumental to its business operations. ABC offers Supplier Corp a substantial sum of money to breach its contract with 123, Inc. ABC does not plan on doing business with Supplier Corp. What are 123’s legal options and why?