You plan carefully for slow money periods, hacks and supply problems. But when a third party or company goes out of their way to hurt your business relationships, it can cost you a lot. This is why California business owners need to see how tortious interference might be hurting their business.
What is tortious interference?
Tortious interference happens when a third party steps in on purpose to damage an active contract or a potential business deal between two separate parties, resulting in financial losses. The outside party is not tied to the contract, so the injured party can sue them directly for the damages they caused.
Two ways it can impact your business
Learning what tortious interference is only tells part of the story. You also need to understand how it can show up in your transactions. Here are the two most common forms:
- Interference with a contractual relationship: A third party improperly convinces one party to break a valid, existing contract, leaving the other party to deal with the fallout.
- Interference with a business relationship: A third party uses unfair or dishonest tactics to disrupt an ongoing or prospective business deal, even without a formal contract in place.
Both forms can cause serious financial harm to your organization. Now that you know what to watch for, here are some practical steps you can take to protect yourself.
Five practical steps to protect your company
Once you know how tortious interference works, you are in a better position to defend against it. In fact, you have practical measures available to protect your business relationships and contracts. Here are five steps to help you get started:
- Fortify your contracts: Include exclusivity and non-solicitation clauses that restrict partners, vendors and employees from soliciting your clients or disrupting your business relationships.
- Use confidentiality agreements: Require employees and partners to sign Non-Disclosure Agreements (NDAs) to protect your trade secrets and client lists.
- Track competitor conduct: If you suspect a third party is trying to poach your clients or pressure your partners to breach agreements, document the timeline of their actions.
- Preserve evidence: Save all emails, text messages or internal memos that show a third party knew about your existing contracts and intentionally caused a breach.
- Know your legal options: If you suspect a third party is crossing the line, learning about the steps available to you early can help you respond quickly and protect your business interests before the situation gets worse.
With the right protections in place, you are in a much stronger position to guard the business relationships you have worked hard to build.
Secure the relationships you have built
Tortious interference can quietly chip away at the business relationships you have spent years building. Therefore, the steps you take today, from strengthening your contracts to knowing your legal options, can make all the difference tomorrow. As a result, staying informed and prepared gives you a solid defense against third-party interference.