Inducing Breach of Contract Legal Definition:

An intentional, economic tort; knowingly and intentionally procuring the breach of a contract, without lawful justification, causing damage to another party to the contract.

Related Terms: Economic Tort , Intimidation , Breach of Contract , Unlawful Interference with Economic Interests , Intentional Tort , Conspiracy , Civil Conspiracy , Efficient Breach , Anticipatory Breach

Also known as:

The origin of the tort is often given as Lumley v Gye in which one theatre owner induced a performer to breach her contract with a competitor and sing, instead, at his venue. The English Court (Justices Erle and Wightman):

"It is clear that the procurement of the violation of a right is a cause of action in all instances where the violation is an actionable wrong, as in violations of a right to property, whether real or personal, or to personal security: he who procures the wrong is a joint wrongdoer, and may be sued, either alone or jointly with the agent, in the appropriate action for the wrong complained of....

"It was undoubtedly prima facie an unlawful act on the part of Miss Wagner to break her contract, and therefore a tortious act of the defendant maliciously to procure her to do so."

Justice Macnaughten, over 100 years ago, in Quinn v Leathem wrote:

"(A) violation of a legal right committed knowingly is a cause of action.... It is a violation of legal right to interfere with contractual relations recognised by law if there be no sufficient justification for the interference."

In Torquay Hotel v. Cousins, Justice Denning suggested an expansion of the tort when he wrote:

"The time has come when the principle should be further extended to cover deliberate and direct interference with the execution of a contract without that causing any breach."

In Posluns v. Toronto Stock Exchange, Justice Gale of the Ontario High Court of Justice wrote:

"While a contract cannot impose the burden of an obligation on one who is not a party to it, a duty is undoubtedly cast upon any person, although extraneous to the obligation, to refrain from interfering with its due performance unless he has a duty or a right in law to so act. Thus, if a person without lawful justification knowingly and intentionally procures the breach by a party to a contract which is valid and enforceable and thereby causes damage to another party to the contract, the person who has induced the breach commits an actionable wrong. That wrong does not rest upon the fact that the intervenor has acted in order to harm his victim, for a bad motive does not per se convert an otherwise lawful act into an unlawful one, but rather because there has been an unlawful invasion of legal relations existing between others

In the 2007 OBG Ltd. v Allan decision of the House of Lords:

"To be liable for inducing breach of contract, you must know that you are inducing a breach of contract. It is not enough that you know that you are procuring an act which, as a matter of law or construction of the contract, is a breach. You must actually realize that it will have this effect. Nor does it matter that you ought reasonably to have done so."

REFERENCES:

  • Lumley v. Gye, 118 E.R. 749 (1853)
  • Torquay Hotel Co. Ltd. v. Cousins, [1969] 2 Ch. 106, [1969] 1 All E.R. 522 at 530,
  • Jones, M. A., editor, Clerk & Lindsell on Torts, 20th Ed. (London: Sweet & Maxwell, 2010), at page 1656
  • OBG Ltd. v. Allan, [2007] UKHL 21
  • Posluns v. Toronto Stock Exchange, 46 D.L.R. (2d) 210 (1964)
  • Quin v Leathem, [1970] AC 495.

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