In Pennsylvania, a party who encourages another to violate a contractual duty or who disrupts another’s business relationships with someone else, can possibly face liability for tortious interference with contractual relations. Glazer v. Chandler, 414 Pa. 304, 200 A.2d 416 (Pa. 1964).
For example, let’s say you own a business that’s losing market share to a competitor. You decide to encourage your competitor’s marketing manager, Sally, to leave her job and join your company instead. Only, Sally still has two years left on her commitment to her current employer. For this, in PA, you can face liability for:
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- your competitor’s actual damages (such as the cost of recruiting a new manager to replace Sally, in the above example),
- financial losses suffered, such as loss of profits,
- punitive damages, and,
- a court order to prevent further disruption of the dealings, via a special or permanent injunction.
Elements to Prove a Claim
To prove a claim for tortious interference, the plaintiff must show:
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- a valid contractual or business relationship that currently exists or is likely to exist in the future (i.e., interference with prospective contractual relations).
- the defendant was aware of the contractual relationship,
- The conduct caused an actual interference with a relationship and resulting damages to the plaintiff,
- The defendant had acted intentionally, and
- The absence of privilege or justification for the defendant’s conduct.
Learn Your Rights
Defenses exist to a claim for tortious interference; these include privilege or justification, discussed below. Given the complexity of the law in these areas, you should consider consulting with an experienced legal representation to review any claim or defense.
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Frequently Asked Questions – FAQ
How Solid Must the “Contractual Dealings” Be?
Liability may attach for interfering with even a tenuous contractual relationship.
For example, “at will” employment amounts to a pretty flimsy relationship between the employer and employee, who can quit at any time, for any reason, such as not liking the color of his boss’s tie! Here, it would not take much to “interfere” with such a fragile relationship. However, PA’s Supreme Court has held that a claim for intentional interference can exist for interference with mere “at will” employment. Salsberg v. Mann, 310 A.3d 104 (Pa. 2024).
What About Potential or Future Contractual Dealings?
“Our courts have also indicated that there may be recovery under this tort theory where a defendant has interfered with prospective contracts or business relationships of third parties with a plaintiff.” See Neel v. Memorial Park, 391 Pa. 354, 358, 137 A.2d 785, 787 (1958) and Glazer v. Chandler, 414 Pa. 304, 307, 200 A.2d 416, 418 (Pa. 1964).
“Interference with prospective advantage,” also known as “tortious interference with a prospective economic advantage,” happens when someone deliberately disrupts a business relationship that has the potential to create future economic benefits, even if there isn’t a contract in place.
What Are the Defenses?
The defenses include privilege or justification.
Business Privilege
Every business has the right to try to win customers away from other companies, if done so legitimately. “[C]ompetitors, in certain circumstances, are privileged in the course of competition to interfere with others’ prospective contractual relationships.” Assembly Technology Inc. v. Samsung Techwin Co., 695 F. Supp. 2d 168 (E.D. Pa. 2010), citing Gilbert v. Otterson, 550 A.2d 550, 554 (Pa. Super. Ct. 1988). Thus, a company selling insurance can invite the customers of competitors to “switch and save.”
Likewise, intense competition for business is generally OK, so long as it stops short of encouraging another to violate a contractual relationship:
“There is in general nothing wrong with one sports agent trying to take a client from another if this can be done without precipitating a breach of contract. That is the process known as competition, which though painful, fierce, frequently ruthless, sometimes Darwinian in its pitilessness, is the cornerstone of our highly successful economic system. Competition is not a tort.” Assembly Technology, Inc., above, citing Speakers of Sport, Inc. v. ProServ, Inc., 178 F.3d 862, 865 (7th Cir. 1999)
