Buyers Memorandum


RE: Liability for Intentional Interference with Contractual Relations

A buyer who attempts to persuade a seller to renegotiate his contractual commitment to a broker runs the risk of a suit for intentional interference with contractual relations. An individual may be held liable under this theory when he intentionally interferes with another's rights under a contract with a third-party if the interference causes the loss of a right under the contract or makes the contract rights more costly or less valuable.

Liability for intentional interference with contractual relations rests on two grounds. First, the defendant must have acted intentionally to interfere with a known contract right. Second, the defendant must have acted in pursuit of some purpose considered improper.

Intent to interfere can be demonstrated by evidence of the defendant's knowledge of a contractual relationship between two parties and conduct such that defendant knows that interference will result.

Improper purpose is determined by the circumstances of each particular case. Courts will examine a number of factors in finding improper purpose, among which include (a) the defendants motive; (b) the interests of both the plaintiff and the defendant; (c) considerations of the business rights of the defendant; and (d) the security of the contractual interests for the plaintiff. In light of these factors, courts have imposed liability on a broad spectrum of conduct found to be improper. A refusal to deal has been held to be improper where it was coupled with a threat or demand that a contract be breached. Current cases have even found improper purpose, and therefore liability, for "peaceable persuasion." Many states have the tort of intentional interference with contractual relations.

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