Inducing a Breach of Contract: Definition and Examples
Inducing a breach of contract is a legal term that refers to persuading or encouraging a party to breach an existing contract with another party. This type of behavior is considered unlawful and can lead to legal consequences, including damages and injunctions.
Definition
Inducing a breach of contract occurs when a third party intentionally causes one of the parties in a contract to breach the terms and conditions of that contract. This behavior can take various forms, such as making false statements, offering incentives to breach, or providing advice on breach.
The concept of inducing a breach of contract is based on two legal principles: tortious interference and agency law. Tortious interference refers to the unjustified interference with someone else`s contractual or business relations, while agency law outlines the relationship between a principal and an agent.
Examples
Here are some examples of inducing a breach of contract:
1. An employee leaves a company to join a competitor and reveals confidential information about the company`s clients, products, and trade secrets. The competitor knew that this conduct amounted to a breach of the employee`s non-disclosure agreement with the former employer but encouraged the employee to do so.
2. A contractor convinces a subcontractor to abandon a project by offering alternative work in the future. The subcontractor breaches the contract with the owner, causing the project to be delayed and the owner to suffer financial losses.
3. A supplier advises a customer to terminate a contract with a competitor and switch to their products instead. The supplier falsely claims that the competitor has quality issues, even though the customer is satisfied with the product.
Legal Consequences
Inducing a breach of contract is a civil wrong that can result in legal liability. The person who induces a breach of contract can be sued for damages, which may include lost profits, expenses incurred, and other losses caused by the breach.
In addition, the party whose contract has been breached can seek an injunction to prevent the third party from continuing to induce further breaches or interfering with their contractual relationships.
Takeaway
Inducing a breach of contract is a serious legal matter that can have severe consequences for both the party that breaches the contract and the person who induces them to do so. It is important to understand the legal implications of this conduct and seek legal advice if you suspect that someone is inducing a breach of your contract.