One of the most common types of claims in commercial law is tortious interference: an allegation that a third party has intentionally disrupted the terms of other parties’ business relationship. As a business owner or leader, it’s important that you be able to recognize the signs that a competitor might be interfering with your interests. And if you notice any of the following signs, be sure to contact a commercial litigation attorney immediately.
What Constitutes Tortious Interference?
Tortious interference claims fall into two categories: tortious interference with contract and tortious interference with prospective business relations. A tortious interference with contract claim arises when a party intentionally interferes in a contractual relationship to encourage or mislead one party to terminate or breach their contract. A tortious interference claim with prospective business relations arises when a party uses unfair means to poach or steal anticipated business deals from another party.
The primary elements of a tortious interference claim are:
- There is a valid contract or a reasonable expectation of a business relationship.
- The interfering party is aware of the contractual relationship or expected business relationship.
- The interfering party has taken action designed to disrupt that relationship.
- The interference results in financial losses for the harmed party, such as lost profits or damaged goodwill,
Tortious interference differs from ordinary business competition as it involves deceitful or unfair conduct by a party that intends to interfere with another party’s business dealings and to take advantage of those dealings for their own profit.
Red Flag #1: Sudden, Unexplained Contract Terminations
One common red flag of tortious interference activity is customers or vendors suddenly terminating their contracts without explanation or clear reasons. Parties who terminate deals may cite “changed circumstances,” “better deals,” “warnings” about the business, or “pressure” from other parties, which may suggest intentional interference from another party designed to convince or coerce customers or vendors to terminate their agreements with your business.
Red Flag #2: False or Misleading Statements About Your Business
Another common red flag of tortious interference is learning of false or misleading statements or claims made about your business. You may hear about competitors spreading rumors or false information about your business, including false claims about the quality of your products or services, warnings about your company’s supposed financial or operational troubles, or allegations that your business is facing legal troubles. These rumors can cause current customers or vendors to terminate their agreements and lead potential business partners to back out of deals.
Red Flag #3: Aggressive Poaching of Employees and Customers
Competitors can also tortiously interfere with your business’s operations by stealing your customers or employees with offers of higher compensation, incentive-laden deals, or threats of adverse business or professional consequences if they do not leave your company. Although offering better deals can represent fair market competition, when competitors use confidential information or use duress to force employees, customers, or vendors to leave your company, such activity may rise to the level of tortious interference.
Red Flag #4: Breach of Confidentiality and Non-Compete Agreements
Tortious interference can also occur when competitors encourage your business’s employees, customers, and vendors to violate non-disclosure or non-compete agreements they have signed with you to obtain your company’s proprietary data, including customer lists, supply costs, marketing plans, pricing data, or trade secrets for your products and services.
Contact Our Edwardsville Commercial Litigation Firm Today
Are you concerned that competitors in your industry are going to unfair lengths to compete with you by intentionally interfering with your relationships? If so, you might have legal claims against them. Contact Byron Carlson Petri & Kalb today for a confidential consultation with a commercial litigation lawyer serving the greater St. Louis metro area. We’ll discuss your suspicions, advise you of your rights, and explain what we can do to hold those competitors accountable for their actions.