Interference with Contractual or Prospective Economic Relations

In general, both state and federal legislatures have an interest in sustaining a balance in economic relations. Therefore, there are state and federal laws that are designed to protect businesses from interference with their economic relations. In fact, whether you are starting a new business, or looking to protect or secure an existing business entity, the legal professionals at the Law Offices of Salar Atrizadeh will apply their knowledge and experience in business transactions and litigation, if necessary, to help you and your business take the steps to protect and secure your economic interests and relations.

Interference with business relations, which falls under the umbrella of unfair competition, is an unlawful practice with available legal remedies. Interference can take place against existing contractual relations or towards prospective economic relations. In the case of interference with prospective economic relations, the facts of the case must show that parties would have entered into a future contract if defendant did not commit the wrongful act. Generally, there is a greater right to interfere with future and possible business relations. On the other hand, the limits of interference are much stricter when dealing with current contractual relations.

Under California law, to establish interference with contractual relations, a plaintiff must show that: (1) a valid contract exists between plaintiff and a third party; (2) defendant knew of the existence of this contract; (3) defendant took intentional steps to interrupt the contractual relation; (4) defendant's actions breached the contractual relation; and (5) plaintiff sustained damages as a result of the breached contract. A court may take into consideration whether the defendant acted intentionally to disrupt the business relation, or whether the interference was an accidental result of innocent behavior.

In California, to establish interference with prospective economic relations, a plaintiff must show that: (1) plaintiff and a third party had an economic relation; (2) the relation between plaintiff and the third party would likely have led to future benefits; (3) defendant knew of the relation; (4) defendant intentionally acted wrongfully in order to interfere with the relation; (5) defendant's actions actually interfered with the relation; and (6) defendant's actions caused plaintiff economic harm.

Intentional interference with business relations, whether existing or prospective, exists in many forms. For instance, trademark infringement, copyright infringement, and patent infringement are all forms of intentional interference with contractual relations since businesses take great care to establish and protect their trade secrets, identity and reputation. Thereafter, they use them to form business relations and economic opportunities.  As such, anyone who interferes with such resources and relations can harm an entities' ability to engage in existing or prospective business opportunities.  Accordingly, courts find that intentional interference with business relations is actionable by law.

To protect your business interests, and ensure that your actions do not interfere with others contractual relations, it is important to seek legal counsel to learn more about your rights and responsibilities. Both before starting a new business, and while conducting ongoing business, our law firm has the legal experience and knowledge to help protect and sustain your business.