Did a third party spoil your existing or proposed contract? Here’s how you may recover.

While you may not know the exact legal requirements to prove contract fraud in court, you are likely aware of the general principle behind the legal theory. 

Proving fraud can be complex, but the idea is straightforward: if you enter into a contract with another party who lies about a significant fact, you can recover money damages through litigation.

Fewer people, even sophisticated parties to a contract, understand tortious interference, and for good reason. Tortious interference as a means to recover money damages in Texas has been an evolving legal theory which has not always had consistent application throughout Texas. And the line between competitive business practices and illegal interference with an existing or proposed contract continues to be a fine line.

Tortious interference is a legal theory intended to allow parties to contract to fulfill contractual obligations without third-party interference.

Of course, business is competitive, and not all competing acts are considered tortious interference. This article will briefly explain the legal concept of tortious interference and the legal requirements which must be met in order to recover under Texas law.

“Tortious interference” law in Texas explained

There are two general types of tortious interference: interference with an existing contract, and interference with a prospective contract or business relation.

To prove tortious interference with an existing contract, you must show that:

  • A contract exists between you
  • A third party willfully and intentionally interfered with that contract; and
  • You suffered damages as a result.

It is generally more difficult to prove tortious interference with a prospective contract or business relation. If no signed contract is in place, you must show that:

  • There is a reasonable probability you and the other party would reach an agreement or business relationship;
  • There was a willful and intentional act of interference that is “independently tortious”; and
  • You suffered damages as a result.

Conduct that is independently tortious or unlawful are “acts which alone would give rise to a cause of action.” In other words, if a third party committed fraud, misrepresentation, misappropriated trade secrets, violated a non-compete agreement, or engaged in some other actionable behavior, then tortious interference is a cause of action under which you can recover.

Legal remedies for tortious interference

If successful, your claim of tortious interference can lead to economic damages for lost profits and other money damages. In addition, if the third party can be shown to have acted with malice, then punitive damages may be available. Finally, a court order can prevent the third party from benefitting from the interference.

If you believe you may have a claim for tortious interference, contact the experienced business litigation firm of Lindquist Wood Edwards LLP to discuss your particular situation and determine whether bringing a claim for tortious interference is appropriate.

Further Reading: