- Jeff Vail vail-law.com
Intentional Interference with Contract
This article is part of Vail Law’s open-source litigation and legal risk management checklist. Connect with me on LinkedIn.
The tort of intentional interference with contract is another common business tort – it provides relief where a competitor (or other party) improperly interferes with the contractual relationships between two parties.
Colorado embraces the definition of the Restatement (Second) of Torts, Section 766, which defines the tort as:
“One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other person for the pecuniary loss resulting to the other from the failure of the third person to perform the contract.”
Trimble v. Denver, 697 P.2d 716, 725 (Colo. 1985) (emphasis in original).
The key question, of course, is what constitutes “improper” interference with a contract? “In determining whether an actor’s conduct in intentionally interfering with a contract . . . of another is improper or not, consideration is given to the following factors:”
(a) The nature of the actor’s conduct;
(b) The actor’s motive;
(c) The interests of the other with which the actor’s conduct interferes;
(d) The interests sought to be advanced by the actor;
(e) The social interests in protecting the freedom of action of the actor and the contractual interests of the other;
(f) The proximity or remoteness of the actor’s conduct to the interference; and
(g) The relations between the parties.
Memorial Gardens, Inc. v. Olympian Sales Management Consultants, Inc., 690 P.2d 207, 2010 n.7 (Colo. 1984) (citing Restatement).
There are, of course, many cases interpreting this standard for “improper” (which is not exactly a model of clarity). Public officials often enjoy personal immunity for actions they take in their public capacity. There is a degree of competitor privilege—a competitor offering a better product for less is not wrongful but inducing a party to breach an existing contract to take advantage of a lower price may well be, especially if the competitor knows of the contract and hopes to harm its competition.
View Vail Law’s complete litigation and legal risk management checklist or contact us to discuss your claims in detail.