Contracts are the lifeblood of most businesses. As businesses go about their operations, contracts provide stability and predictability. Depending on the business, contracts can determine almost every aspect of the business, including cost, materials, employment terms, production schedules and more. When contracts are breached, a variety of issues may arise. After a breach, the conflict is typically contained between the contracting parties. What happens, though, when a third party is instrumental in getting one of the parties to breach the contract for the third party’s benefit?
Tortious Interference with Contract
Illinois recognizes tortious interference with contract as a cause of action. Simply put, tortious interference with contract happens when a third party induces a breach of a contract to which it is not a party. While many people in business may not have heard of it, tortious interference happens all too frequently.
Elements of Tortious Interference
Illinois courts typically require five elements proven to sustain a verdict for tortious interference of contract. They are as follows:
●There must be a valid and enforceable contract between the plaintiff and another party;
●Party alleged to have interfered must have knowledge of the contract;
●Defendant must have intentionally and unjustifiably induced breach of the contract;
●Subsequent breach of the contract must have been caused by the defendant’s actions; and
●Plaintiff must have suffered damages
An example might be helpful. Suppose Joe makes computer chips. He agrees to sell them to Bob for $100 apiece and they enter a contract where Joe will provide 1,000 per month for the next two years. Steve, Bob’s competitor, finds out about the contract from Joe. Steve then tells Joe that he will take all Joe’s production for the next two years and pay him $125 each. He mentions none of the production can be sold to Bob. Joe then agrees to supply Steve and breaches his contract with Bob. Bob then must go out and get his chips from another supplier for $150 apiece. Steve, here, has likely committed tortious interference with contract.
While it is rare to see a case as simple as the example above, it illustrates the elements necessary to sustain a case.
There must be a word or two of caution, though. If a competitor is luring you clients away, it most likely not interference with a contract. There is a distinct difference between reasonable business practices and what happened in the example above. Also, the plaintiff must show they were in compliance with the terms of the contract at the time of the breach. Their noncompliance could be used to show that the breach was justified.
Business contracts and the litigation they cause can be very complex. It takes a seasoned and experienced attorney to navigate these complexities successfully. Our skilled attorneys have years of experience helping clients obtain the results they deserve. If you believe your business is a victim of tortious interference, contact us today at (312) 223-1699. We can analyze your facts within the legal framework. Let us help you compete on a level playing field.