Understanding Tortious Interference With Business Relationships and Contracts
Ohio law recognizes causes of action for both tortious interference with a business relationship and tortious interference with contract rights. They differ only in that the former tort does not require proof of a contractual relationship. “The torts of interference with business relationships and contract rights generally occur when a person, without a privilege to do so, induces or otherwise purposely causes a third person not to enter into or continue a business relation with another, or not to perform a contract with another.”
The Supreme Court of Ohio formally recognized the existence of tortious interference with a contract in Kenty v. Transamerica Premium Ins. Co. In order to recover under the tort of tortious interference with a contract, a plaintiff must prove all of the following elements :
(1) the existence of a contract;
(2) the defendant’s knowledge that a contract existed;
(3) the defendant’s intentional procurement of the contract’s breach;
(4) the defendant’s lack of justification for the procurement of the breach of the contract; and
(5) the damages that resulted from the breach.
Tortious interference with business relationships includes intentional interference with prospective contractual relations not yet reduced to a contract. The interference, however, must be intentional, because Ohio law does not recognize negligent interference with a business relationship. A plaintiff is entitled to restitution for any pecuniary loss which naturally and proximately results from such intentional misconduct. It must be observed however, that actual damages are required. The elements of tortious interference with a business relationship are :
(1) a business relationship;
(2) the tortfeasor’s knowledge thereof;
(3) an intentional interference causing a breach or termination of the relationship;
(4) damages resulting therefrom.
For both the above causes of action, the lack of justification in procuring the breach, requires a plaintiff to present proof that the defendant’s interference with the contract was improper. If a defendant’s interference with a business relationship of a contract is justified, then such action is not actionable. Rather, only improper interference is actionable. Specifically, the Supreme Court of Ohio has held that a defendant’s interference with a contract is not actionable when the defendant is vested with a privilege. Ohio law places the burden of proving a lack of privilege or a lack of justification upon the plaintiff.
In determining whether defendant’s interference is improper, the Supreme Court of Ohio in Fred Siegel, adopted §767 of the Restatement of Torts (2d) and held that the following factors should be considered:
(1) the nature of the defendant’s conduct; This is the chief factor that the court should consider.
(2) the defendant’s motive;
(3) the interests of the plaintiff with which the defendant’s conduct interferes;
(4) the interests sought to be advanced by the defendant;
(5) the social interests in protecting the freedom of action of the defendant and the contractual interests of the plaintiff;
(6) the proximity or remoteness of the defendant’s conduct to the interference; and
(7) the relations between the parties.
About: Rayan F. Coutinho is an attorney with the Business Group at Wood & Lamping LLP and can be reached at rfcoutinho@woodlamping.com or (513) 852-6030.
admin @ November 14, 2008