If a third party interfered with your ability to conduct business, you may have a cause of action against the third party under the tort of intentional interference in contractual relations, or the tort of intentional interference in economic relations. While both the torts are intentional torts, Canadian courts have attempted to distinguish between the two.
What Is the Tort of Intentional Interference with Contractual Relations?
When one party, without legal justification, inhibits another party from completing their contractual responsibilities with a third party, the tort of intentional interference with contractual relations can be established. This could happen, for example, if a supplier deliberately acts to prevent a distribution company from satisfying its contractual responsibilities to deliver items to a retailer with whom they have a contract.
The plaintiff must show the following to prove the tort of interference with contractual relations:
- There was a contract between the plaintiff and a third party;
- the defendant was aware of the contract;
- the defendant’s conduct hindered contract fulfillment;
- the defendant acted with the intent to interfere with the contract; and
- the plaintiff suffered damages as a result.
While it is clear that the defendant’s primary intention must be to interfere with the plaintiff’s contractual connections with another party, provincial courts have differed in their interpretation of the required intention to establish the tort. The Ontario Court of Appeal concluded that it is insufficient for a violation to be a foreseen result of the defendant’s actions[1], however the Manitoba Queens Bench determined that recklessness as to contractual interference satisfies the requirement of intent[2]. The intentional act, however, does not have to be malicious or unlawful.
What Is the Tort of Intentional Interference with Economic Relations?
The tort of Intentional interference with economic relations is defined as the “intentional infliction of economic injury on the plaintiff by the defendant’s employment of unlawful measures against a third party”.[3]
The tort of intentional interference with economic relations has three components:
- The defendant must have interfered with the plaintiff’s economic interests;
- the interference must have been illegal; and
- the plaintiff must have suffered economic harm as a result of the interference.
AI Enterprises Ltd v Bram Enterprises Ltd, an unanimous Supreme Court of Canada decision, clarified that “unlawful means” refers to the defendant’s activities that might give rise to a civil claim by a third party against the defendant[4]. As a result, “unlawful means” refers to the civil damage done to a third party rather than the criminality of an action.
The plaintiffs in AI Enterprises sued a joint owner who was jeopardizing the sale of a property to a third party. The tort was not established, according to the court, because the injury done to the third-party purchaser was not actionable.
The tort, however, was established in Grand Financial Management Inc v Solemio Transportation Inc, where the court found that Grand Financial jeopardized the plaintiff’s business by illegitimately obtaining security interests owned by a third party[5].
If you have any questions about potential breaches of contract or intentional interference claims, contact Cactus Law today to speak with a civil litigation lawyer.
Disclaimer:
The information presented above is solely for general educational and informational purposes. It is not intended to be, and should not be taken as, legal advice. The information given above may not be applicable in all cases and may not even reflect the most recent authority after the date of its publication. Nothing in this article should be relied on or acted upon without the benefit of legal advice based on the specific facts and circumstances described, and nothing in this article should be interpreted otherwise.
[1] Correia v. Canac Kitchens 2008 ONCA 506.
[2] Payjack v. Springhill Farms 2002 MBQB 98.
[3] Grand Financial Management Inc v Solemio Transportation Inc 2016 ONCA 175, at para 65.
[4] In the unanimous Supreme Court of Canada.
[5] In the unanimous Supreme Court of Canada.
