Operating a business in California can be a Darwinian struggle for survival. Not only must you serve your customers, but also third parties can interfere with your most important business relationships.
Fortunately, you are not left to your own device when a competitor undermines your firm. Under certain circumstances, you can bring a business lawsuit against them.
What is tortious interference?
This tort action covers situations where a competitor intentionally disrupts another party’s contractual or business relationships, resulting in economic harm. It comes in two types:
Interference with a contract
This occurs when a party intentionally induces a contracting party to breach their agreement. For example, a competitor persuades a supplier to stop fulfilling its contract with a business.
Interference with a business relationship
Even without a contract, a competitor’s actions can still be tortious interference if they intentionally damage a business relationship, which leads to economic harm. One example is when a competitor spread false rumors about a business that damage its reputation among vendors.
What are the elements of tortious interference?
To establish tortious interference, you must prove the following five elements:
- The plaintiff must demonstrate that a valid contractual or business relationship existed between them and a third party. This relationship could be a formal written contract or an informal, yet legally recognized, business arrangement.
- The interference must be intentional.
- The defendant must have knowledge of the relationship.
- The interference must violate legal norms or ethical standards of the industry.
- Damages. The defendant’s interference must have caused harm to the firm. These economic damages may not be concrete. Harm can include lost reputation or damage to the brand.
Tortious interference is a complex and multifaceted legal action that provides a remedy for wrongful interference in contractual or business relationships.