Legal Memorandum: Tortious Interference with Contractual Relations

Issue: Under New York law, what elements are necessary to prove a cause of action for inducing breach of contract and/or tortiously interfering with business relations?

Tortious interference with contractual relations consists of four elements: (1) the existence of a contract between the plaintiff and a third party; (2) the defendant’s knowledge of the contract; (3) the defendant’s intentional inducement of the third party to breach or otherwise render performance impossible; and (4) damages to the plaintiff.  “Since damage is an essential element of the tort, the claim is not enforceable until damages are sustained.”

Monex Fin. Servs. Ltd. v. Dynamic Currency Conversion, Inc. 19 Misc. 3d 1113(A), 859 N.Y.S.2d 904 (Sup. Ct. Nassau County 2008) (citations omitted).  The plaintiff must allege that the defendant had actual knowledge of the contract; an allegation that the defendant should have known of the existence of the contract is not sufficient.  Id.

A claim for tortious interference with existing business relations requires a similar showing; a claim for tortious interference with prospective business relations, also called prospective economic advantage, does not require the existence of a contract.

[T]o establish a claim based on tortious interference with existing business relations, a plaintiff must show (1) the existence of a business relation with a third party, (2) defendant’s interference with the relation by use of dishonest, unfair or improper means, and (3) plaintiff sustained damages.  Similarly, “[t]ortious interference with [prospective] business relations applies to those situations where the third parties would have entered into an extended or contractual relationship with plaintiff but for the […]

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