contractual interference in Alabama

Liability For Interference with Contractual Relations

In our capitalistic society, the laws have been designed in a way to promote the freedom of entities and individuals to enter into contractual relations as they want. Unfortunately, an increasing number of commercial litigation cases in Alabama have involved claims of tortious interference in business relations. This type of claim is filed by the possessor of a contract against an alleged intermeddler that adversely affected the contractual relations.

What Is Tortious Interference?

Tortious interference occurs when someone interferes with business interests or relationships intentionally. There are two types of tortious interference:

  • Intentional interference with prospective economic advantage
  • Intentional interference with existing contractual relations

Interference with prospective economic advantage involves an intermeddler that damages the other party’s chances of entering into a business relationship. Intentional interference with existing contractual relations involves the intentional sabotage of another person’s existing contract.

Proving Liability in Wrongful Interference

There are specific elements required for proving tortious interference. However, these can vary between jurisdictions, which makes it important that you consider a knowledgeable local business attorney. Generally, the plaintiff is required to meet the following elements for proving wrongful interference with contractual relations:

  • The existence of a valid contractual relationship or contract
  • The tortfeasor was aware of this relationship or contract
  • The tortfeasor intentionally induced one of the contracting individuals to breach the contract
  • The tortfeasor was not in a position to otherwise authorize or induce the breach
  • There was an actual breach of contract
  • Specific economic damage was suffered by the plaintiff because of the tortious interference

Remedies for Tortious Interference with Contracts

Remedies issued in a tortious interference case are usually dependent on the seriousness and the type of harm caused to the plaintiff. Compensatory damage is a more common remedy available in a civil tort case. This involves monetary damages provided to the plaintiff. Compensatory damages are awarded to cover economic harm, such as replacing or repairing the property. It may also include lost money and medical expenses related to the contract breach.

In some cases, an injunction may be ordered by the court. This is to get the defendant to stop doing things that caused harm to the plaintiff. For instance, the defendant may be asked to stop spreading rumors about the plaintiff. The defendant may be asked to clean up an oil spill if they caused it to lower the property value.

In limited circumstances, plaintiffs may be awarded punitive damages. These are provided in very specific circumstances and are intended to punish the defendant for their malicious and harmful actions or gross negligence. Punitive damages are rare since they are awarded only in the most egregious of cases where the compensatory damages are considered insufficient. They are awarded when the defendant is required to pay a price beyond compensating the plaintiff for actual damages.

Alabama Supreme Court Addresses Interference with Business Claims

The important decision in Fitzpatrick v. Huehn made by Alabama Supreme Court addressed issues in relation to the tort of intentional interference with business or contractual relations. The case involved a dispute among family members regarding the sale of a property that had an operational flea market.

Valid argument and affirmative defense were that the defendant was not a ‘stranger’ to the contract. An issue dealt with was whether the defendant or plaintiff had the burden to raise this during the pleadings. Over the last 7 years, the Alabama Supreme Court has elaborated the defense for preventing tortious interference claims against companies or persons that were parties to the contract in such a manner that they may not be considered a stranger to the contract.

The court in the case of Fitzpatrick v. Huehnheld that the defense was not an affirmative defense. Instead, it was part of the burden of proof on part of the plaintiff for presenting the claim.

Proactive Actions to Protect Your Company

The threat of tortious interference should not be ignored by individuals or entities. There are several steps you can take to protect your business and interests if you are negotiating a new contract or are already in a contract with another company.

Few proven ways to do this include:

  • Require all contractors, consultants, and employees to sign non-disclosure agreements
  • Keep your confidential information secure
  • Monitor social media and online platforms for any leaks or unauthorized disclosures
  • Act quickly if you think that tortious interference took place

It is vital that you act quickly and file a legal complaint against the offender if you believe tortious interference took place. Your company can get damaged more if you wait long. The attorney you retain will seek injunctive relief for preventing further interference. Tortious interference cases are complicated, and you should always consider retaining an accomplished business litigation attorney.

Get Legal Advice from a Qualified Business Litigation Attorney

The qualified and diligent legal team at the BHM Law Group can help if you suffered losses in contractual relations because of tortious or wrongful interference. It’s critical that you file your claim in a timely manner or you could limit your recovery. To schedule your complimentary consultation with our business lawyers, call us at (205) 994-0902 or reach us online.

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