Have You Ever Had a Competitor Steal a Contract from You?

Contractors should be careful not to get involved in a business malpractice known as tortious interference and be aware if another contractor is committing a tortious interference. Tortious interferences often come between contractors where one party intentionally damages or interferes with the other party’s business contract or relationship. Interferences may cause damage to a party’s business or business relationships resulting in a loss of money and future jobs. There are four elements that must be established to show a tortious interference with a business contract: (1) existence of a valid contractual relationship or business expectancy, (2) knowledge of the contractual relationship or expectancy by the defendant, (3) intentional interference inducing or causing a breach or termination of the contractual relationship, and (4) resulting damage to the party whose contractual relationship or expectancy has been disrupted.

 An example, imagine Contractor A agrees to build a home for the homeowner. Contractor B, who is aware of the contract between Contractor A and homeowner, comes along and says to the homeowner, “Contractor A does bad work, I will build your home with better workmanship and for a lower cost.” Homeowner then decides to enter a contract to build his home with Contractor B. Contractor B would now be interfering with a business contract because there was a valid contractual relationship, Contractor B had knowledge of the contractual relationship, Contractor B intentionally interfered, causing a breach of the contractual relationship, and the result of the breach is damage to Contractor A. Contractor B has ruined the relationship between Contractor A and the homeowner, which may lead to Contractor A’s future business ventures and relationships declining. Contractor A may be remedied for Contractor B’s interference through compensatory damages (these pay for what was lost or left on the contract), an injunction may be issued (this will stop the defendant from doing what they are doing), and may be awarded punitive damages (these punish the wrongdoer, with the intent to deter those further actions).

To protect yourself, current, and future business relationships, contractors should be aware of what a tortious interference with a business contract/relationship is including how to appropriately act when conducting business as well as being able to spot when someone may be attempting to interfere with your business.