Tortious Interference with Business Relations
"WHEN A COMPETITOR STEPS OVER THE LINE."
Generally speaking, there is nothing wrong with fierce economic competition between companies. However, there are certain dubious business behaviors that turn what might otherwise be considered routine gamesmanship into actionable conduct. Under both Massachusetts and Rhode Island law, any third party who intentionally seeks out to disrupt or otherwise interfere with an existing contractual relationship can be liable for the damage that results from interference. The legal mechanism to hold the offending party responsible is a claim of tortious interference with contractual or advantageous business relations.
The established elements of a claim of tortious interference with contractual or advantageous business relations are as follows: (1) plaintiff had a contract, expected contract or other advantageous business relationship with a third party; (2) defendant knew of the contract or business relationship; (3) defendant induced the third party to breach or otherwise impair the contract or advantageous relationship; (4) defendant acted out of improper motive or employed improper means, and (5) defendant's conduct caused the plaintiff pecuniary harm.
A showing of improper motive requires proof of the defendant's actual malice, i.e., a spiteful, malignant purpose, unrelated to the legitimate corporate interest. The motivation of personal gain, including financial gain, generally is not enough to satisfy the improper interference requirement. Nor is business competition an improper motive, although the use of improper means to prevail in the business competition can give rise to liability. If the actor succeeds in diverting business from his competitor by virtue of superiority in matters relating to their competition, he serves the purposes for which competition is encouraged. For competition and for the rough and tumble of the world of commerce, there is tolerance even though the fallout of that rough and tumble is damage to one of the competitors. Conduct motivated by desire to advance a party's business interest is not improper.
Most businesses are reliant on a variety of different yet essential business relationships. These relationships of course often involve existing contracts as well as contracts that are in the process of being negotiated and finalized. If a competitor engages in intentional conduct designed specifically to disrupt or destroy one or more of your business relationships, you need not sit back idly and suffer the consequences of this malfeasance. To the contrary, you are able to hit back in the form of an action for tortious interference with contractual or advantageous business relations. While it’s difficult to meet all of the required elements, filing suit will send the message that such conduct will not be tolerated nor go unchallenged.