In today's cut-throat business world, businesses will often do almost anything to gain the upper-hand. Unfortunately, sometimes businesses get a bit too zealous in their pursuits when their dealings cross the line from being "good business" to downright actionable in a California court of law.
When companies compete for business, it is quite possible for one company to interfere with a contract already in place between two other companies. When a company interferes with the contract of another company, there exists various business torts in California available to the injured party - including the torts of intentional inducement of a breach of contract and intentional interference with the performance of a contract.
Intentional Interference with Contract
In California, to state a cause of action for the tort of intentionally inducing a breach of contract the plaintiff is required to prove all of the following elements:
- The plaintiff had a valid and existing contract with a third party
- The defendant had knowledge of the contract and intended to induce its breach
- The contract was in fact breached by the contracting party
- The breach was caused by defendant's unjustified or wrongful conduct
- Damages were suffered as a result.
However, one thing to note is that this cause of action requires an actual breach, which presents the question, is there any remedy when a company acting wrongfully doesn't actually induce a breach, but still interferes with the plaintiff's business?
Well, the answer is yes, and that tort in California is known as intentional interference with the performance of contract - which is slightly broader than the tort of intentional inducement of a breach in that it provides protection for acts that do not necessarily result in a breach. To prove this claim in California, a plaintiff must show:
- A valid contract between plaintiff and a third party
- The defendant had knowledge of this contract
- The defendant committed intentional acts designed to interfere or disrupt the contractual relationship
- Actual interference or disruption of the contractual relationship
- Resulting damage
While these two business tort claims are very similar, if pleaded wrong it can lead to a case being dismissed, which is why it is important to know your rights and options prior to filing any type of business tort lawsuit.