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Intentional Interference With Contract In Tennessee (Part One)

One of a number of “business torts,” as they are called, which is recognized in Tennessee is the tort of intentional interference with contract. That tort is sometimes also referred to as “procurement of breach of contract” or “tortious interference with contract.” There is a Tennessee statute which makes procurement of breach of contract a tort. Businesses need to be aware of this tort, particularly since a party who commits it is liable for three times the actual damages suffered by the injured party.

In our practice, this cause of action seems to arise often in employment matters. For example, we handled a case where an employee, who was not bound by any non-compete agreement, left one employer and went to work for a competitor. Working for a competitor, when there is not a non-competition agreement in effect is, standing alone, not a problem. The legal problem in the case we handled arose because, after the employee started with the competitor of his former employer, a valuable customer of the former employer began doing business with the new employer.
Intentional interference claims also arise frequently when an employee who is bound by a non-compete agreement resigns or is terminated, and then goes to work for a competitor. Such a situation can create a liability problem, not only for the employee, but also, for the employer who hired the employer if that employer was aware of the non-competition agreement.

Mere competition will not result in liability for interference with contract. For example, it is perfectly okay for a business to convince someone to do business with it, instead of with a competitor, because it has a better product or service. On the other hand, while convincing someone that a product or service is better than a competitor’s, lying about a competitor’s products or services may well result in liability. (In the law, lying is referred to as defaming, libeling or slandering).

If you are confronted with a situation in which a competitor’s contractual relationship with a third party might be negatively affected by something you are doing, or planning to do, it is probably worth running your plans by your lawyer. For a Tennessee case that contains a good discussion about the basic elements of the tort of intentional interference with contract, take a look at Buddy Lee Attractions, Inc. v. William Morris Agency, Inc.