What Is Tortious Interference With a Contract or Business?

Tortious interference makes an outsider liable for intentionally wrecking someone else's business dealings. California recognizes two versions. Interference with contract applies when a defendant who knew about an existing contract intentionally induced a breach or disruption of it. Interference with prospective economic advantage protects relationships that had not yet ripened into contracts, but requires something more: the defendant's conduct must be independently wrongful, unlawful by some measure beyond the interference itself, such as fraud, misrepresentation, or a statutory violation.

The distinction matters because competition is not a tort. California expects businesses to chase each other's customers; it does not permit them to do it by inducing breaches of existing contracts or through independently unlawful means. Defendants who are parties to the contract cannot be liable for interfering with their own agreement, though they may be liable for breach.

These claims appear constantly in departing employee disputes, broker and commission fights, deals that collapsed after a competitor whispered in the buyer's ear, and campaigns to poach a rival's key relationships. Damages can include the lost contract's value and, in egregious cases, punitive damages.