Tortious Interference With A Business Relationship
Competition is good! But when the competition steals your existing customers or influences an existing or prospective customer not to enter into a contract with you by making untrue statements about your products or services, or your character, the line of what’s fair – even in the dog-eat-dog world of business – is crossed. Fortunately, there is a legal remedy when this line gets crossed. It’s called “tortious interference with a business relationship.”
The elements of tortious interference with a business relationship are as follows: (1) the existence of a business
relationship under which the plaintiff has legal rights; (2) knowledge of the relationship on the part of the defendant; (3) an intentional and unjustified interference with that relationship by the defendant; and (4) damage to the plaintiff as a result of the breach of the business relationship. A “business relationship” as defined under the first prong does not require the existence of a contractual agreement. However, there needs to be an actual and identifiable understanding or agreement which in all probability would have been completed if the defendant had not interfered.
The second and third prongs of a tortious interference claim usually go hand-in-hand. That is, the defendant had actual knowledge of the business relationship the plaintiff had with a customer and the defendant intentionally and unjustifiably interfered in that relationship. But note, merely attempting to obtain the existing customer’s business due to one’s own financial or economic interest is not enough to meet the second and third prongs. This is considered healthy competition. Rather, the interference must be “unjustified.” Unjustified interference occurs when the business competitor acts with an improper motive such as out of spite or greed and makes misrepresentations about the plaintiff’s business, threatens physical violence, or indulges in other illegal conduct such as fraud or deception to steal the plaintiff’s customers.
Damages in a claim for tortious interference with a business relationship are those that the plaintiff would have received but for the wrongful interference with the existing or identifiable prospective customer. However, a business plaintiff cannot recover damages for lost “potential customers” or loss of customers in the “community at large.”
Moreover, the mere expectation that past customers might choose to buy again will not support an award of damages in a tortious interference claim.