You work hard to build your book and set up relationships that provide a strong and healthy future for your company. Then a competitor comes along and intentionally tries to interfere with your business relationship with your customers, or even encourages your business partner of customer to breach their contract with you. We live in a free market economy – competition is the locomotive that drives our economic system. But when do the acts of a competitor become unfair competition, or rise to the level of a civil wrong?
There are situations where a business or business owner may have grounds for legal action based on the conduct of a competitor. The common law (judge-made law) tort of tortious interference can take a number of forms, including:
- Where a competitor convinces your customer or business partner to breach a contract they have with you
- Where a competitor take action that disrupts your ability to perform under a contract, or the ability of one of your business partners to perform under a contract
- When a competitor attempts to interfere in a prospective business relationship or your position in the market by unfair or fraudulent means
- When a competitor falsely defames you in the marketplace, saying falsely that your product or service is substandard or you are at the doorstep of bankruptcy
- Wrongfully appropriating your confidential business information, such as your customer or prospect list, work papers indicating your planned bids or profit margins, and other private business information
Frequently, the tort of business interference arises when your competitor goes to a third party, someone with whom your business partner has a contract, and induces that party to breach a contract with your business partner, resulting in the cancellation of a contract between you and your business partner. Tortious interference can also occur when your competitor wrongfully induces another party not to enter into a business relationship with you, if the relationship would otherwise likely have occurred.
If you can prove the elements of a claim of tortious interference, trade libel or theft of trade secrets, you can seek economic losses as well as punitive damages. You can also obtain injunctive relief to prevent further interference.