Wrongful interference with a business relationship, also known as tortious interference, is a significant legal issue that arises when a third party intentionally disrupts a current or expected economic relationship. These disruptions, whether through fraud, defamation, coercion, or undue influence, can cause considerable financial harm, sever trust between partners, and damage a business’s reputation.

While healthy competition is protected and encouraged in business, wrongful interference crosses the line into illegal conduct. For business owners, employees, and entrepreneurs, understanding what constitutes wrongful interference, how it is proven, and how to defend against it is essential for protecting commercial success and legal rights.

This guide offers an in-depth exploration of wrongful interference, including its legal elements, common examples, remedies, and proactive measures to safeguard your business relationships.

At its core, wrongful interference occurs when one party intentionally interferes with another party’s existing business relationship or future business opportunities. It typically falls into two distinct categories:

Wrongful Interference with an Existing Contract: This happens when a third party knowingly causes one party to breach a legally enforceable contract. For example, persuading a supplier to break an exclusive distribution agreement to favor a competitor qualifies as interference.

Wrongful Interference with a Prospective Business Relationship: In this case, no formal contract exists, but the plaintiff has a reasonable expectation of entering into a business relationship. Examples include disrupting negotiations, spreading false information to derail a pending partnership, or sabotaging bids in competitive markets.

These two forms share a common thread: they involve intentional misconduct that results in harm. However, proving interference with a prospective relationship is often more complex due to the lack of a formal contract.

To successfully establish wrongful interference, the following elements must generally be proven:

• Existing Relationship or Expectation: A valid contract, agreement, or realistic expectation of a business relationship must exist.
• Defendant’s Knowledge: The defendant must have been aware of the existing contract or prospective business relationship.
• Intentional Interference: The defendant’s actions must have been deliberate and purposeful, not accidental or negligent.
• Wrongful Conduct: The interference must involve improper conduct, such as fraud, defamation, coercion, or unfair tactics.
• Actual Harm: The plaintiff must show clear financial damages, such as lost contracts, revenue, or opportunities.

For example, if Company A is negotiating a deal with a key supplier and Company B spreads false claims about Company A’s solvency, causing the supplier to pull out of the deal, Company B could face liability for wrongful interference.

Wrongful interference can occur in a variety of business settings. Here are a few common scenarios to illustrate how this tort can unfold:

• Inducing Breach of Contract: A competitor convinces a business partner, supplier, or vendor to breach an existing contract to secure a better deal.
• Disrupting Business Negotiations: A third party spreads misinformation or makes false statements to interfere with ongoing business negotiations or pending agreements.
• Poaching Clients or Employees: Using wrongful tactics such as defamation or breaching non-compete agreements to lure clients or employees away.
• Spreading Defamatory Statements: Making false, damaging statements about a competitor, leading a partner or customer to sever the business relationship.
• Unethical Interference in Bidding: Using unfair tactics, such as leaking confidential information, to sabotage another business’s offer.

Example: Suppose a consultant, working with two competing businesses, shares confidential pricing information from one business to help the other win a contract. This would constitute wrongful interference.

If accused of wrongful interference, several defenses can be raised, including:

• Justification or Privilege: The defendant acted to protect their legitimate business interests or contractual rights.
• Lack of Intent: The defendant’s actions were not intentional or deliberate but rather incidental or unknowing.
• Legitimate Competition: The defendant’s actions were lawful and fell within the bounds of fair competition.
• No Actual Damages: If the plaintiff cannot demonstrate actual financial harm, the claim may not succeed.

To minimize the risk of wrongful interference and protect your business relationships, consider these steps:

• Formalize Agreements in Writing: Written contracts provide clear documentation of existing relationships and obligations, making it easier to prove interference if a dispute arises.
• Use Non-Compete and Non-Solicitation Clauses: Include enforceable clauses in agreements to prevent unfair poaching of clients, staff, or opportunities.
• Monitor Competitor Behavior: Stay aware of competitors’ actions and document any suspicious conduct that may indicate wrongful interference.
• Consult Legal Counsel: Work with attorneys to review contracts, strengthen protections, and respond promptly to any signs of interference.

Wrongful interference with a business relationship is a serious legal issue that can undermine partnerships, disrupt negotiations, and cause substantial financial harm. By understanding the legal elements, recognizing common scenarios, and taking proactive measures to protect business interests, individuals and companies can safeguard themselves against unethical interference.

If you suspect your business has been harmed by wrongful interference, it’s crucial to seek legal guidance immediately. Acting swiftly can help you recover damages, stop ongoing harm, and protect the future success of your business.