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Interference with a Contract

Interference with a Contract

When parties come together to form a contract, a third party may interfere with the performance of that contract or induce one party to breach it. In such a case, the injured party may bring an action against the third party for interfering with his economic relations with the other contracting party or parties.

 

Example: A property owner hires a contractor to build a structure. A third party, who is also a contractor, destroys the contractor’s materials to prevent him from performing the contract so that the property owner will hire the third party instead. The third party may be liable for interference with a contract.

 

 

Applicable contracts

 

 

Generally, a third party may be liable for interfering with any type of contract as long as the contract is:

 

* in full force and effect;

 

* not an illegal bargain (e.g., a contract to murder someone is illegal); and

 

* not against public policy (e.g., a contract by a public official to pass certain legislation for a lobbying group is against public policy).

 

 

One recognized exception to this rule is that a third party may not be liable for interfering with a contract between two parties to marry.

 

 

Interfering conduct

 

 

In order for a third party to be liable for interfering, he has to intend to interfere. Mere negligent or inadvertent interference is not actionable. Thus, he must know of the existence of the contract.

 

 

The third party’s actions clearly must cause the interference. If he just stands by and waits for the contracting parties to break their contract so that he can reap the benefits, he is not liable. Generally, an injured party may show that the third party caused the interference by proving that he prevented a contracting party from performing or made it more difficult for him to perform.

 

 

The interfering conduct must also cause damage to the injured party.

 

 

Relief

 

 

It may be difficult to assess monetary damages for a third party’s interference with a contract. Some courts look to the contract to determine what it would have awarded an injured party for a breach. Other courts determine what damages were proximately caused by the interference.

 

 

When a monetary figure cannot be ascertained, courts may award injunctive relief. Such an injunction may prevent the third party from further interfering and require the breaching party  specifically to perform the contract.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.

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