Don’t Interfere With My Contract

David Allen

Partner

Jaburg | Wilk Attorneys at Law

Most people understand that there are two totally distinct types of legal “cases,” each governed by their own set of laws; namely, civil cases and criminal cases. But many people do not understand that within the broad category of civil cases there exists distinct sub-categories of cases, including contract cases and tort cases. As its name suggests, contract cases involve disputes relating to an agreement of some type, either written or oral, between two or more parties. Tort cases, on the other hand, involve disputes between two or more people relating to some type of wrongful action taken by one of the parties against the other. There are a wide array of actions that constitute torts, ranging from wrongful death to fraud to simple negligence, and many more.

One claim that combines the elements of both breach of contract and a tort is the tort claim of “intentional interference with contract.” In order to prevail on such a claim the plaintiff must prove: (1) the existence of a valid contractual relationship between the plaintiff and a third party; (2) knowledge of the relationship on the part of the interferer/defendant; (3) intentional interference by the interferer/defendant inducing or causing a breach of the contract by the third party; (4) resulting damage to the plaintiff whose contractual relationship with the third party has been disrupted; and (5) that the interferer/defendant acted improperly.

Say, for example, that a Buyer of real estate has a binding contract with the Seller, represented by listing broker Agent, to buy the Seller’s property. At some point while the parties are in escrow, the Seller tells the Agent that it no longer wants to sell to the Buyer and would rather put the property back on the market to obtain a higher sales price. Agent, seeing opportunity to earn a higher commission on a higher sales price, wrongfully advises Seller that it can cancel the escrow, which is what Seller then does. In this scenario, not only can the Buyer sue the Seller for the breach of their contract, but the Buyer can also sue Agent for intentional interference with contract.

One important thing to note is that to the extent that the damage incurred by Buyer because of the breach by Seller is the same as the damage incurred as a result of Agent’s interference, even though Buyer could obtain a judgment against both of them, it cannot collect the same damages twice. However, it is certainly possible for Buyer to obtain a judgment for specific performance against Seller, while concurrently obtaining a judgment for consequential damages against Agent.

A different, albeit related tort claim that could arise is “intentional interference with business expectancy.” The key difference between this claim and one for ‘intentional interference with contract” is that there does not need to be a valid contractual relationship between the plaintiff and a third party, but rather only an “expected” business relationship whereby the plaintiff stands to benefit, which is wrongfully interfered with by the interferer/defendant.