Also known as: prospective contractual relation · prospective economic advantage
Written by attorneys · grounded in primary & secondary sources — see below
A tort imposing liability on one who intentionally and improperly interferes with another's reasonable expectation of entering into a contract. The interference must cause pecuniary harm from the loss of the anticipated benefits of the relation.
Radiology Associates was in advanced talks with Lakeside Regional Hospital for an imaging services contract. Valley Imaging, a rival, told the hospital board that Radiology Associates faced a serious fraud investigation, knowing the claim was false and based only on a routine audit. The board canceled the anticipated agreement. Radiology Associates lost the expected revenue from the unexecuted contract.
HarborPoint neared final approval on a city pension board asset management mandate after several positive meetings. MetroBank sent trustees an anonymous report that used falsified charts and omitted exculpatory data to suggest serious regulatory violations. The board ended negotiations. HarborPoint lost the expected long-term fees from the mandate.
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Jesse nearly finalized an engagement letter with Blue Advocacy for regulatory work. Frontier Law received an inquiry from Blue Advocacy seeking a second opinion and responded with public information about Jesse's limited resources and experience. Frontier Law also offered to handle the matter at a discount. Blue Advocacy declined Jesse's agreement and retained Frontier Law instead. Jesse lost the expected engagement fees.
The plaintiff must show a reasonable probability of a future contractual relationship, the defendant's knowledge of that expectancy, intentional and improper interference by the defendant, and resulting pecuniary loss. The Restatement requires that the interference be both intentional and improper under the circumstances.
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Interference is improper when the actor employs wrongful means such as fraud or misrepresentation, or when the conduct lacks a legitimate competitive purpose. Truthful information supplied in response to a request or accurate public data generally does not qualify as improper.
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A competitor may lawfully seek business through truthful persuasion or better terms without incurring liability. The privilege does not extend to the use of false statements, selective misrepresentations, or other wrongful means that induce the third party to abandon the expected relation.
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Many jurisdictions require the plaintiff to prove that the defendant's conduct was independently wrongful, such as fraud or violation of another legal duty. This requirement allocates the burden to the plaintiff rather than requiring the defendant to justify otherwise lawful competition.
…24 Cal. 3d 799, 598 P. 2d 60 (1979), the California court recognized a cause of action for negligent interference with prospective economic advantage. [^maj-4]: Most of the admiralty cases concerned fishing vessels. Delaval concedes that the courts and Congress, at times have provided special protection for fishermen. This case involves…