Sued for interfering with someone else’s contract.

New York recognizes two interference torts, and they are not interchangeable. Interference with an existing contract requires an actual breach you procured. Interference with prospective business relations requires wrongful means aimed at the other party: violence, fraud, misrepresentation, baseless suits, criminal prosecution, or extreme economic pressure. Ordinary competition is not wrongful means. Start by reading which one was pleaded.

Which tort am I actually being sued for?

New York recognizes two separate interference torts. One protects an existing, enforceable contract and requires proof that the third party actually breached it. The other protects a relationship that never ripened into an enforceable contract and requires proof of wrongful means. A complaint that pleads both in the alternative may state a claim under neither.

The distinction is not a technicality. It controls what the plaintiff must prove, what conduct is even capable of being unlawful, and whether your justification defeats the claim. Find the cause of action headings. Then find the paragraph identifying the contract or relationship you allegedly damaged. Everything below follows from those two things.

What are the elements of tortious interference with contract in New York?

Tortious interference with contract has five elements in New York: a valid contract between the plaintiff and a third party, the defendant’s knowledge of that contract, the defendant’s intentional procurement of the third party’s breach without justification, an actual breach of the contract, and damages resulting from that breach. All five are required. A missing element ends the claim.

• A valid contract between the plaintiff and a third party. It must be enforceable and with someone other than you. If the plaintiff is suing you over a contract you signed, the pleading names the wrong tort. That is a breach of contract case.
• Your knowledge of the contract. Knowing a competitor has customers is not knowledge of a contract. The complaint should say when you learned of the specific agreement and how.
• Intentional procurement of the breach, without justification. Procurement means you caused the third party to break the contract. Knowledge alone is not procurement, and conduct merely incidental to a breach the third party reached on its own is not either.
• An actual breach. Nonperformance of something the contract required. Disappointment is not breach.
• Damages resulting from the breach. Not damages generally. Damages flowing from the breach you procured.

Some decisions state the rule in four parts, folding breach into procurement. Nothing turns on the count.

Law: Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413, 424 (1996); Israel v. Wood Dolson Co., 1 N.Y.2d 116, 120 (1956); Foster v. Churchill, 87 N.Y.2d 744, 750 (1996).

What does “actual breach” mean, and what if the third party never breached?

Actual breach means the third party failed to perform something the contract required it to perform. If the third party performed, or if it ended the contract by exercising a termination right the contract itself gave it, there is no breach. The fourth Lama Holding element is missing and the contract claim fails, though a prospective-relations claim may survive.

Work the documents in order. Find the clause said to be broken, then the notice or termination provision, then what the third party actually did. A customer who sent a thirty-day notice under a termination-for-convenience clause did not breach. A distributor whose term expired and declined to renew did not breach. A counterparty who paid late but cured within the cure period did not breach.

In each of those you can have knowingly solicited that party and the contract claim still fails, because the tort protects the plaintiff’s contractual entitlement and nothing was taken from it. Understand the limit. No breach kills the contract claim; it does not defeat a properly pleaded prospective-relations claim, which is measured by the wrongful means standard below.

I read the termination clause of the contract the plaintiff says was broken before I read a word of the complaint’s narrative. I ask for the termination letter and the notice provision before I ask anyone what was said in the meeting.

The plaintiff’s anger is not an element. Breach is.

Why is interference with prospective business relations harder to plead?

Interference with prospective business relations covers deals that never became enforceable contracts, and New York compensates for that weaker interest by demanding stronger misconduct. The conduct must be directed at the third party the plaintiff hoped to do business with, and as a general rule it must amount to a crime or an independent tort. Lawful conduct rarely suffices.

The Court of Appeals has described wrongful means as physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure. Persuasion alone is not wrongful means, even when knowingly directed at pulling business away. In Carvel, the Court explained that most items in that catalog describe conduct that is criminal or independently tortious, and rejected the franchisees’ claim for want of such conduct directed at their customers.

There is one narrow exception the plaintiff will try to use. Conduct undertaken for the sole purpose of inflicting intentional harm can support the claim even when otherwise lawful. Sole means sole. A defendant who acted to win business, protect a margin, or keep a supplier had a purpose other than harm. Direct interference with the third party is still required either way.

Law: Carvel Corp. v. Noonan, 3 N.Y.3d 182, 189-92 (2004); NBT Bancorp Inc. v. Fleet/Norstar Fin. Group, Inc., 87 N.Y.2d 614 (1996); Guard-Life Corp. v. S. Parker Hardware Mfg. Corp., 50 N.Y.2d 183, 191 (1980).

Is competing for the customer wrongful means?

Ordinary competition is not wrongful means. Offering a better price, a faster delivery, a longer warranty, or a more attractive term is lawful conduct, and lawful conduct will not ordinarily support a prospective-relations claim. Persuasion alone is excluded by name. Competition that procures the breach of an existing contract is a different question with a different answer.

So separate what you did into two columns. Lawful conduct in one: solicitation, advertising, price cutting, hiring, refusing to deal, telling the truth about your product. Potentially wrongful conduct in the other: false statements of fact, threats of violence, a meritless suit filed to pressure the customer, a criminal complaint filed to coerce. If the second column is empty, say so plainly and let the plaintiff identify which lawful act became a crime or an independent tort.

What if the contract was terminable at will?

A contract terminable at will is generally classified as a prospective contractual relation only, not an existing contract, so the plaintiff must satisfy the tougher wrongful means standard rather than the ordinary interference-with-contract standard. Guard-Life adopted that classification. The practical effect is large: lawful competition actionable against a fixed-term contract is not actionable against an at-will one.

Read the term provision before you concede anything. Month-to-month service arrangements, purchase orders with no minimum commitment, at-will employment, and dealer arrangements cancelable on notice all tend to land in the prospective category. The classification is a question of law, but winning it before answering usually requires the signed agreement as documentary evidence under CPLR 3211(a)(1).

Law: Guard-Life Corp. v. S. Parker Hardware Mfg. Corp., 50 N.Y.2d 183, 191-92 (1980); CPLR 3211(a)(1).

Do I have a defense if I had a financial stake in the other company?

Economic interest is a defense to interference with an existing contract. A defendant who acted to protect its own legal or financial stake in the breaching party’s business may be justified, and the defense is overcome only by malice or by fraudulent or illegal means. Foster v. Churchill so held.

In Foster the defense carried the day even though the elements of the tort were otherwise established. The recognized categories are concrete: a significant stockholder in the breaching party’s business, a parent of it, a creditor of it, or the holder of a management contract with it at the time of the inducement.

Do not treat it as automatic. It is yours to establish, the stake must be one you actually held in the breaching party, and the conduct must be explainable as protection of that stake. A lender who told a borrower to stop paying an affiliate is arguing inside the defense; whether it wins turns on the documents and on malice or illegality.

Law: Foster v. Churchill, 87 N.Y.2d 744, 750 (1996); White Plains Coat & Apron Co. v. Cintas Corp., 8 N.Y.3d 422, 426 (2007).

When does the economic interest defense fail?

The defense fails when the defendant had no prior economic relationship with the breaching party and asserts only a generalized interest in soliciting business for profit. In White Plains Coat & Apron, the Court of Appeals held that a competitor’s generalized profit motive does not justify knowingly procuring the breach of a rival’s contract.

The boundary is a relationship test, not an interest test. Mere status as a competitor is not a stake in the breaching party’s business. Wanting the customer is not a stake. Owning part of it, lending to it, or managing it is. With no prior relationship, build the defense on the elements: no enforceable contract, no knowledge, no procurement, no breach.

A stake in the breaching party is a shield. Appetite for its business is not.

How do the two torts compare side by side?

Interference with an existing contract and interference with prospective business relations differ on four things that decide cases: whether a breach is required, how bad the conduct must be, how at-will arrangements are classified, and whether an economic stake supplies justification. The table below sets those differences against each other.

How long does the plaintiff have to sue for tortious interference?

Tortious interference with contract is governed by the three-year period for injury to property under CPLR 214(4), and the claim accrues when the plaintiff first sustains actual damage from the interference, not necessarily when the contract was breached. Breach of contract carries six years under CPLR 213(2).

That rule cuts both ways. Kronos rejected the argument that the clock always starts at the breach, so a plaintiff injured later can reach back further than the interference date suggests. Fix the date damage was first sustained before you call a claim stale.

Law: CPLR 214(4); CPLR 213(2); Kronos, Inc. v. AVX Corp., 81 N.Y.2d 90, 92 (1993).

What should you do in the first week after being served?

The first week is for documents and deadlines, not arguments. Calendar the response date, gather the contract the plaintiff says was breached, and determine whether the third party breached it or ended it under a right it held. Those three steps decide whether a pre-answer motion to dismiss is worth making.

• Calendar the deadline. Under CPLR 320(a) the time to appear is generally 20 days after personal delivery of the summons within New York and 30 days when service is completed any other way. A CPLR 3211 motion served before your pleading extends the time to answer under CPLR 3211(f). Do not let a default occur while the merits are being studied.
• Get the contract itself. Not the plaintiff’s description of it. The signed document, amendments, notice provision, and term and termination clauses.
• Get the exit paper. The termination letter, the non-renewal notice, the purchase order that was never placed. This is the evidence that the breach element is missing.
• Identify the tort pleaded. If the claim is prospective relations, list every act the complaint calls wrongful and ask which one is a crime or an independent tort.
• Map your stake. Were you a shareholder, lender, parent, or manager of the party that allegedly breached? Write down the instrument proving it.
• Check the dates. When did the plaintiff first sustain damage? That date, not the interference date, drives CPLR 214(4).
• Preserve everything. Suspend routine deletion of email and messages touching the plaintiff, the third party, and the deal.
• Stop the commentary. No explanatory calls or emails to the third party about the lawsuit. Those become exhibits.

By the end of that week you should be able to state three things in one sentence each: which tort is pleaded, whether an actual breach is alleged and supported, and whether you held a stake that supplies justification. Existing contract with no breach, and the motion writes itself. Prospective relations with nothing but competition alleged, and the motion writes itself. On a CPLR 3211 motion the complaint still gets every favorable inference, so the argument has to be one the documents or the law decide.

Law: CPLR 3211; CPLR 320(a).