While the tort of interference with contractual relations and the tort of interference with economic relations are both intentional torts, Canadian courts have attempted to clarify the distinction between the two.
What is the Tort of Intentional Interference with Contractual Relations?
The tort of intentional interference with contractual relations can be found when someone, without legal justification, prevents another party from performing their contractual obligations with a third party. For example, this may happen when a supplier intentionally acts to prevent a distributing company from meeting its contractual obligations to deliver goods to a retailer with whom they have a contract.
To establish the tort of interference with contractual relations, the plaintiff must demonstrate:
- a contract existed between the plaintiff and a third party;
- the defendant had knowledge of the contract;
- the defendant’s actions hindered the performance of the contract;
- 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 primary intention of the defendant must be to interfere with the contractual relations of the plaintiff with another party, provincial courts have varied in their interpretation of the required intention to establish the tort. The Ontario Court of Appeal ruled that it is not enough for a breach to be a foreseeable consequence of the defendant’s actions ; while the Manitoba Queens Bench found that recklessness as to contractual interference satisfied the requirement of intent . Nonetheless, the intentional act 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 captures the “intentional infliction of economic injury on the plaintiff by the defendant’s use of unlawful means against a third party” .
The tort has three elements:
- the defendant must have interfered with the plaintiff’s economic interests;
- the interference must have been by unlawful means; and
- the plaintiff must have suffered economic harm as a result.
In the unanimous Supreme Court of Canada decision, AI Enterprises Ltd v Bram Enterprises Ltd, the court clarified that “unlawful means” relates to the actions of the defendant that would give rise to a civil claim by the third party against the defendant. Therefore, “unlawful means” does not speak to the criminality of an action, but rather the civil wrong done to the third party.
In AI Enterprises, the plaintiffs sued a joint owner that was compromising the sale of the property to a third party. The court concluded that the tort was not established because the wrong to the third-party purchaser was not actionable.
However, the tort was established in Grand Financial Management Inc v Solemio Transportation Inc, where the court found that Grand Financial threatened to put the plaintiff out of business by illegitimately seizing security interests held by a third party.
It is important to understand the cause of action you are pleading in your claim. Hummingbird Lawyers LLP has two offices for your convenience. Providing qualified, skilled and experienced lawyers in Toronto and lawyers in Vaughan, we are committed to giving our clients the convenience, expertise and guidance they need. Should you have questions as to potential breaches of contract or intentional interference claims, contact us today to speak with a civil litigation lawyer.