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September 13, 2023 | BusinessContract DraftingLitigationNew York

What is Tortious Interference?

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Andrew Ramstad

Associate Attorney

In business, where competition and conflicts abound, understanding the nuances of business torts is crucial.  Here, we delve in depth into one particular business tort and its negative impact: Tortious Interference.

Understanding Tortious Interference 

A tort is a wrongful act that causes harm and results in legal liability for the actor.  Business torts refer to actions that cause economic harm to a business.  Examples include theft of trade secrets, interference with business relationships and defamation.  These causes of action are distinct from breach of contract claims.  New York General Business Law recognizes several different types of business torts.  Tortious Interference is one such tort.  Tortious interference is when an individual or business interferes with one of their competitor’s business contracts or relationships with a third party and causes some form of economic harm to that business.

What Constitutes Tortious Interference? 

In a typical tortious interference case, the defendant is the person or entity that “interfered” with the contract.  What constitutes interference?  Many things can, including unethical business practices, inducement, force and even blackmail.

In tortious interference cases, there are typically two victims – both of which can sue the defendant and recover a range of different types of monetary damages, depending on the case.  The first victim is the business or entity economically damaged by the breach of contract or relationship.  The second is the individual that broke the contract or business relationship due to the defendant’s interference.

Types of Tortious Interference 

There are two different types of tortious interference claims that can be brought by either of these victims, each triggered by their own unique set of circumstances: Tortious Interference with Contract and Tortious Interference with Prospective Economic Advantage.  A tortious interference with contract requires an existing contractual relationship, whereas tortious interference with prospective advantage involves a business relationship that has not been finalized.

 Tortious Interference with Contract

Tortious Interference with Contract happens when a defendant intentionally convinces or causes a third party to breach its contract with the plaintiff.  In order to bring this claim, a plaintiff must show it had a valid contract with another party, that the defendant knew about the contract and that the defendant intentionally induced one of the parties to breach that contract – causing the plaintiff to suffer economic damages.

A successful plaintiff can recover monetary damages, including the loss of any benefits the plaintiff would have received under the contract that was interfered with.  Injunctive relief can be granted when monetary damages are an inadequate form of relief, such as when the plaintiff would suffer irreparable harm due to the defendant’s ongoing interference.

 Tortious Interference with Prospective Economic Advantage

Tortious Interference with Prospective Economic Advantage happens when two parties have a business relationship, but do not yet have a valid contract exists between them.  In prospective economic advantage cases, if a defendant interferes with a business relationship, that defendant may be held liable for the resulting harm to the plaintiff—even though no valid contract had been signed between the two parties.

To prove this type of Tortious interference claim, a plaintiff is required to prove there was an established connection between themselves and another business or individual, that the defendant knew of this connection and proceeded to intentionally and knowingly interfered with the business relationship by wrongful means – such as fraud, deceit, undue economic pressure or physical violence – thereby causing harm to the business relationship.  Additionally, the plaintiff must show that but for the defendant’s conduct, plaintiff would have entered a contract with the third party.

Examples of Tortious Interference 

Tortious interference can manifest in various forms, including unethical conduct, extortion, enticement and coercion.

Tortious Interference with Contract could arise in a situation similar to the following example: consider a purchaser who has a contract with a manufacturer to purchase smart watches.  Aware of the contract between the purchaser and manufacturer, a competitor of the manufacturer might falsely tell the purchaser that the manufacturer will not be able to deliver the smart watches on time, or perhaps offer their own smart watches at an unreasonably low price to undercut the manufacturer’s prices.  In doing so, the competitor coaxes the purchaser to breach the contract with the original manufacturer.

Tortious Interference with Prospective Economic Advantage could arise in an instance similar to the following: consider a purchaser who has an exclusive connection with a manufacturer to purchase and sell their brand of ice cream.  The manufacturer – persuaded by an outside third-party – decided one day to begin selling their ice cream to other purchasers in an attempt to make more of a profit.  Additionally, the manufacturers forced the original purchaser to pay substantial licensing fees and to upgrade their store in order to continue to buy and sell their product while it was selling the product to the new purchasers at bargain prices.  By advising the manufacturer to undercut the connection they had with the original purchaser, the outside third-party has harmed the business relationship between the two parties.

Defenses Against Tortious Interference Claims 

Defenses against tortious interference claims vary depending on the law at issue.  In New York, a defendant can typically defeat a tortious interference claim by showing:

  • The defendant had an economic interest in the breaching party’s affairs;
  • The defendant had the legal right to take such action and interfere;
  • The claim was brought after the three-year statute of limitations had expired; or
  • The defendant’s interference is legally permitted in the marketplace, such as when:
  • The defendant sends out regular advertising and business solicitations as part of their normal course of business; or
  • The defendant makes goods produced by a specific business available at lower prices in a location different than that business’s store (i.e., how Amazon will sell products on their website at lower prices than you would see on the product manufacturer’s website).


When engaging with parties you know have existing contractual or business relationships, be mindful of your interactions with them.  If you induce either party to breach their contract, or avoid entering a contract with each other, you may be held liable for their economic losses.  If a claim is brought against you, best practice is to contact experienced legal counsel for advice on how to proceed.


Photo by Benjamin Child on Unsplash
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