Intentional Interference With Contract in Massachusetts
Understanding Tortious Interference with Contracts
In the competitive world of business, interactions between competitors can sometimes cross the line into actionable territory. In Massachusetts, the legal concept of "tortious interference with contract" plays a crucial role. As a business owner, it's vital to distinguish between fair competition and actions that might lead to claims of tortious interference or unfair competition. Below are the elements of a claim for tortious interference, and some key considerations.
Requirement 1: An Existing or Prospective Contract or Economic Relationship
To initiate a claim, there must be an existing or potential contract or economic relationship with a third party. This relationship can take various forms, from formal contracts to oral agreements, ongoing business dealings, or even prospective relationships that haven't solidified into contracts. This often pertains to customer relationships but can also extend to agreements with former employees.
Requirement 2: Intentional Interference
To establish a case, you need to demonstrate that someone's actions intentionally disrupted your contractual relationship. This involves proving that the defendant knew about the relationship and intended to interfere with it. Direct communication with the third party or actions hindering their business dealings with you are examples of intentional interference.
Requirement 3: Improper Means or Motive
The defendant's conduct must involve either an improper motive or wrongful actions. Economic motivations, such as competition, are generally considered proper. Improper motives might include personal grudges or attempts to gain leverage in other disputes. The critical factor is often whether the means of interference were improper. Improper means may include misrepresentation, breaches of contract, or breaches of fiduciary duty.
Requirement 4: Breach of Contract or Loss of Relationship
For contract interference claims, you must prove that the defendant's actions induced a breach of the contract. Unsuccessful interference attempts won't support a claim. In cases of interference with prospective economic relationships, you must demonstrate the loss of that relationship. This can be more complex than proving the loss of a specific contract, especially when prospective customers are involved.
Intentional Interference in the Employment Context
It's important to note that claims for interference with contractual relations generally don't apply in the employment context in Massachusetts. This is because one cannot interfere with their own contract. However, there are exceptions, such as individuals within a company wrongfully interfering with another employee's status.
Intentional Interference and Non Compete Agreements
When an employee moves to a competitor, the former employer may attempt to enforce a non-compete agreement against them. In such cases, analyzing the improper means test is crucial. The new employer's motive is typically economic and therefore not improper. They usually have no direct relationship with the former employer and no fiduciary duty. Liability for interference hinges on whether the new employer engaged in wrongful actions, such as making false representations or improperly accessing information. Simply hiring someone subject to a non-compete typically doesn't constitute interference.
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