Legal Memo Tortious interference with contract
MEMORANDUM TO: FROM DATE: RE: Splendide’s Potential Claim for Tortious Interference with Contract and/or Prospective Contractual Relations Against our Client, Jewels and Gym QUESTIONS PRESENTED I. Under New York law, tortious interference with contract requires an existence of a valid contract between plaintiff and third party, defendant’s knowledge of that contract, defendant’s intentional procurement of third party’s breach of contract without justification, actual breach of contract, and damages. ... department stores, did J&G, with knowledge of the existing contracts between Splendide and Macys and Splendide and Saks, intentionally and improperly interfere with those contracts in order to induce Macys and Saks to breach which resulted in an actual breach of contract? ... In an action for tortious interference with prospective contract rights, as distinguished from tortious interference with contract, where there is no breach of an actual contract but only interference with prospective contract rights, plaintiff must show more culpable conduct on the part of the defendant. At the time the January 10th letter was sent, Splendide and Nordstrom had had several contract negotiation meetings, but Nordstrom backed out of the most recent meeting scheduled for January 13, 2002. Did J&G improperly, dishonestly, or unfairly interfere with a prospective contractual relation between Splendide and Nordstrom that would have formed a contract had it not been for the conduct of our client? ... Under New York law, if a threat is made for a valid economic purpose and not with improper means or actuated by actual malice then a complaint for tortious interference will be insufficient. If what J&G wrote in its January 10th letter constitutes a threat or interference, J&G will have to show that it was economically justified in doing so and that it not employ improper means or actual malice. Does J&G have a viable defense for economic justification if Splendide does have a maintainable claim for tortious interference? ... In addition to acting within the terms of its contract, Jewels and Gym did not maliciously and improperly intend to interfere with Splendide’s contract. ... STATEMENT OF FACTS On January 15, 2002, Splendide served J&G, our client, with a summons and complaint commencing an action in New York Supreme Court, asserting three causes of actions: (1) breach of contract; (2) tortious interference with contract; and (3) breach of the duty of good faith and fair dealing. ... This memo analyzes whether Splendide’s claim of tortious interference with contract and prospective contractual relations will survive in a motion to dismiss by J&G. ... The most recent distributor contract was executed in January of 2001, and was set to expire in January of 2003. ... department stores under section 12 of their contract on finding its product being sold in discount stores. ... In addition, Splendide had had several contract negotiation meetings with the senior merchandising manager at Nordstrom who had carried a small line of WBW during the winter season but did not place a spring order. ... On January 13, 2002, Nordstrom’s senior merchandising manager cancelled a contract negotiation meeting with Splendide’s CEO scheduled for that day. ... It also alleges that although no contract existed with Nordstrom, there were several contract negotiation meetings going on and that J&G had interfered with a prospective contractual relation. ... Whether Splendide has a claim for Tortious Interference with Contract Under New York Law, in order to maintain a claim for tortious interference with contract, the plaintiff must prove (1) the existence of a valid contract between plaintiff and the third party, (2) defendant’s knowledge of that contract, (3) defendant’s intentional procurement of third party’s breach without justification, (4) the actual breach of the contract, and (5) damages resulting there from. ... In this case, a valid contract did exist between Splendide and both Macys and Saks. ... Defendant must have knowledge of the contract. It is unclear from the facts provided whether J&G had knowledge of those contracts, but for the purposes of this memo, knowledge is presumed. ... Even assuming that interference did occur, the interference must further be shown to be improper before recovery may be had. ... A court will most likely not allow a claim for tortious interference with contract in regards to the contracts with Macys and Saks, as J&G will demonstrate that there was no improper interference on their part and that there is no causal link between its actions and the breach of contract which occurred by Macys and Saks. A valid contract must exist and an actual breach must occur. ... Nordstrom did not have an actual contract with Splendide but had several contract negotiation meetings. (This will further be discussed in the Prospective Contract section. ... In Guard-life, the plaintiff who had an exclusive distributor agreement with a manufacturer brought an action for tortious interference with contract action against defendant who also entered into an exclusive distributor contract with knowledge of plaintiff’s contract. ... The Court of Appeals held that the manufacturer’s decision to withhold delivery of an order and not complete an obligation under the contract constituted a breach. ... Macy breached its contract on that same day. ... Courts have refined the standard over the years as to what constitutes interference. ... They have weighed a number of factors to determine whether interference is “improper” such as the nature of the conduct, the interest of the party being interfered with, and the relationship between the parties. ... 2d 583 (1996), the court held that economic interest is enough to overcome improper interference unless there is a showing of malice or illegality. J&G believed that it was within the terms of its contract to terminate on 30 days notice the exclusive distributor agreement with Splendide. ... The case law discussed above supports an argument that the actions of J&G did not constitute an improper interference. ... In light of this analysis, Splendide will probably not have a maintainable action for tortious interference with contract for failure to satisfy all the elements and therefore, fail to state a cause of action. ... Whether Splendide has a claim for Tortious Interference with a Prospective Contract New York law distinguishes tortious interference with prospective contract in that where there is no breach of an existing contract, but only interference with prospective contract rights, plaintiff must show more culpable conduct on part of the defendant that is required when existing contract has been breached. ... Splendide must show that J&G used wrongful means or was acting solely to harm Splendide and that but for J&G’s actions Nordstrom would have entered into the contract. ... The court found that there was no interference with prospective business relations by sending a letter, which contained no actionable misrepresentation, to target corporation’s board for not getting a chance to submit a revised bid before rival’s bid was accepted by the board. It also held that wrongful means includes physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure, although they do not include persuasion alone even though knowingly directed at interference with contract. ... Nordstrom did not currently have a written contract with Splendide at the time the letter was sent. ... Although there was no written contract, several contract negotiation meetings had taken place between the two companies. ... J&G believed it was well within its contract to terminate the agreement with a 30 days notice. ... Although Nordstrom cancelled a contract negotiation meeting, no other department stores cancelled their outstanding orders. ... Splendide may be able to show that there is a causal link between the letter sent and the decision by Nordstrom to cancel their contract negotiation meeting. They must show that Nordstrom would have entered into the contract but for the actions of J&G they did not. ... Here, a claim for tortious interference with a prospective contract will probably not succeed for failure to show the use of wrongful means, a sole intent to injure the plaintiff, and a clear causal relationship between the defendant’s actions and the actions of the third party. Based on what they have alleged, Splendide does not have a maintainable cause of action for tortious interference with a prospective contract. ... Whether Splendide has a viable defense to Tortious interference with Contract. New York law has allowed economic justification to negate improper interference. ... If J&G can reasonably show that their decision to terminate its distributor agreement with Splendide was made in order to prevent further decline in its market share and that interference was not intentional but incidental, then they may be able to assert the defense of economic justification. ... In Foster, the court held that economic interest is a defense to an action for tortious interference with a contract unless there is a showing of malice or illegality. ... The court dismissed the tortious interference action because of the defendant’s protection of economic justification at that they were acting within the economic interests of the company. ... 2d 977 (3rd Dep’t, 1994), the court dismissed the claim for tortious interference. ... It urged plaintiff to terminate its contract with a third party in order to ensure that its funds were being used in a manner consistent with public policy. ... 2d 172 (2nd Dep’t, 1986), the Appellate Division dismissed the claim of tortious interference. The reason for the interference was to protect public interest. The defendant did not engage in a contract with the plaintiff in order to make sure that the construction at hand was done safely and properly. In that case, the plaintiff failed to show that a valid contract did exist but the court found that the acts alleged by the defendant were reasonably justified. The court held that the interference was not improper because it was not done by unlawful means and not committed solely for the purpose of injuring the plaintiff. ... In Felsen, the defendants as the sole stockholder of Sol Cafe, had an existing economic interest in the affairs of Sol Cafe which it was privileged to attempt to protect when it interfered with plaintiffs contract of employment with Sol Cafe. ... 2d 248 (1999), the tortious interference claim was dismissed. ... The interference with the plaintiff’s contract with the third party was incidental to that lawful purpose. ... If J&G can reasonably show that their decision to terminate its distributor agreement with Splendide was solely to prevent further decline in its market share and that interference was not intentional but only incidental to its operating in the best interests of the company, then J&G can assert a defense of economic interest which Splendide will unlikely be able to overcome. CONCLUSION Splendide will probably not have a maintainable action for tortious interference with contract. ... In addition, based on what they have alleged, Splendide does not a have a maintainable cause of action for tortious interference with prospective contractual relations. ... MEMORANDUM TO: FROM DATE: RE: Splendide’s Potential Claim for Tortious Interference with Contract and/or Prospective Contractual Relations Against our Client, Jewels and Gym QUESTIONS PRESENTED I. Under New York law, tortious interference with contract requires an existence of a valid contract between plaintiff and third party, defendant’s knowledge of that contract, defendant’s intentional procurement of third party’s breach of contract without justification, actual breach of contract, and damages. ... department stores, did J&G, with knowledge of the existing contracts between Splendide and Macys and Splendide and Saks, intentionally and improperly interfere with those contracts in order to induce Macys and Saks to breach which resulted in an actual breach of contract? ... In an action for tortious interference with prospective contract rights, as distinguished from tortious interference with contract, where there is no breach of an actual contract but only interference with prospective contract rights, plaintiff must show more culpable conduct on the part of the defendant. At the time the January 10th letter was sent, Splendide and Nordstrom had had several contract negotiation meetings, but Nordstrom backed out of the most recent meeting scheduled for January 13, 2002. Did J&G improperly, dishonestly, or unfairly interfere with a prospective contractual relation between Splendide and Nordstrom that would have formed a contract had it not been for the conduct of our client? ... Under New York law, if a threat is made for a valid economic purpose and not with improper means or actuated by actual malice then a complaint for tortious interference will be insufficient. If what J&G wrote in its January 10th letter constitutes a threat or interference, J&G will have to show that it was economically justified in doing so and that it not employ improper means or actual malice. Does J&G have a viable defense for economic justification if Splendide does have a maintainable claim for tortious interference? ... In addition to acting within the terms of its contract, Jewels and Gym did not maliciously and improperly intend to interfere with Splendide’s contract. ... STATEMENT OF FACTS On January 15, 2002, Splendide served J&G, our client, with a summons and complaint commencing an action in New York Supreme Court, asserting three causes of actions: (1) breach of contract; (2) tortious interference with contract; and (3) breach of the duty of good faith and fair dealing. ... This memo analyzes whether Splendide’s claim of tortious interference with contract and prospective contractual relations will survive in a motion to dismiss by J&G. ... The most recent distributor contract was executed in January of 2001, and was set to expire in January of 2003. ... department stores under section 12 of their contract on finding its product being sold in discount stores. ... In addition, Splendide had had several contract negotiation meetings with the senior merchandising manager at Nordstrom who had carried a small line of WBW during the winter season but did not place a spring order. ... On January 13, 2002, Nordstrom’s senior merchandising manager cancelled a contract negotiation meeting with Splendide’s CEO scheduled for that day. ... It also alleges that although no contract existed with Nordstrom, there were several contract negotiation meetings going on and that J&G had interfered with a prospective contractual relation. ... Whether Splendide has a claim for Tortious Interference with Contract Under New York Law, in order to maintain a claim for tortious interference with contract, the plaintiff must prove (1) the existence of a valid contract between plaintiff and the third party, (2) defendant’s knowledge of that contract, (3) defendant’s intentional procurement of third party’s breach without justification, (4) the actual breach of the contract, and (5) damages resulting there from. ... In this case, a valid contract did exist between Splendide and both Macys and Saks. ... Defendant must have knowledge of the contract. It is unclear from the facts provided whether J&G had knowledge of those contracts, but for the purposes of this memo, knowledge is presumed. ... Even assuming that interference did occur, the interference must further be shown to be improper before recovery may be had. ... A court will most likely not allow a claim for tortious interference with contract in regards to the contracts with Macys and Saks, as J&G will demonstrate that there was no improper interference on their part and that there is no causal link between its actions and the breach of contract which occurred by Macys and Saks. A valid contract must exist and an actual breach must occur. ... Nordstrom did not have an actual contract with Splendide but had several contract negotiation meetings. (This will further be discussed in the Prospective Contract section. ... In Guard-life, the plaintiff who had an exclusive distributor agreement with a manufacturer brought an action for tortious interference with contract action against defendant who also entered into an exclusive distributor contract with knowledge of plaintiff’s contract. ... The Court of Appeals held that the manufacturer’s decision to withhold delivery of an order and not complete an obligation under the contract constituted a breach. ... Macy breached its contract on that same day. ... Courts have refined the standard over the years as to what constitutes interference. ... They have weighed a number of factors to determine whether interference is “improper” such as the nature of the conduct, the interest of the party being interfered with, and the relationship between the parties. ... 2d 583 (1996), the court held that economic interest is enough to overcome improper interference unless there is a showing of malice or illegality. J&G believed that it was within the terms of its contract to terminate on 30 days notice the exclusive distributor agreement with Splendide. ... The case law discussed above supports an argument that the actions of J&G did not constitute an improper interference. ... In light of this analysis, Splendide will probably not have a maintainable action for tortious interference with contract for failure to satisfy all the elements and therefore, fail to state a cause of action. ... Whether Splendide has a claim for Tortious Interference with a Prospective Contract New York law distinguishes tortious interference with prospective contract in that where there is no breach of an existing contract, but only interference with prospective contract rights, plaintiff must show more culpable conduct on part of the defendant that is required when existing contract has been breached. ... Splendide must show that J&G used wrongful means or was acting solely to harm Splendide and that but for J&G’s actions Nordstrom would have entered into the contract. ... The court found that there was no interference with prospective business relations by sending a letter, which contained no actionable misrepresentation, to target corporation’s board for not getting a chance to submit a revised bid before rival’s bid was accepted by the board. It also held that wrongful means includes physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure, although they do not include persuasion alone even though knowingly directed at interference with contract. ... Nordstrom did not currently have a written contract with Splendide at the time the letter was sent. ... Although there was no written contract, several contract negotiation meetings had taken place between the two companies. ... J&G believed it was well within its contract to terminate the agreement with a 30 days notice. ... Although Nordstrom cancelled a contract negotiation meeting, no other department stores cancelled their outstanding orders. ... Splendide may be able to show that there is a causal link between the letter sent and the decision by Nordstrom to cancel their contract negotiation meeting. They must show that Nordstrom would have entered into the contract but for the actions of J&G they did not. ... Here, a claim for tortious interference with a prospective contract will probably not succeed for failure to show the use of wrongful means, a sole intent to injure the plaintiff, and a clear causal relationship between the defendant’s actions and the actions of the third party. Based on what they have alleged, Splendide does not have a maintainable cause of action for tortious interference with a prospective contract. ... Whether Splendide has a viable defense to Tortious interference with Contract. New York law has allowed economic justification to negate improper interference. ... If J&G can reasonably show that their decision to terminate its distributor agreement with Splendide was made in order to prevent further decline in its market share and that interference was not intentional but incidental, then they may be able to assert the defense of economic justification. ... In Foster, the court held that economic interest is a defense to an action for tortious interference with a contract unless there is a showing of malice or illegality. ... The court dismissed the tortious interference action because of the defendant’s protection of economic justification at that they were acting within the economic interests of the company. ... 2d 977 (3rd Dep’t, 1994), the court dismissed the claim for tortious interference. ... It urged plaintiff to terminate its contract with a third party in order to ensure that its funds were being used in a manner consistent with public policy. ... 2d 172 (2nd Dep’t, 1986), the Appellate Division dismissed the claim of tortious interference. The reason for the interference was to protect public interest. The defendant did not engage in a contract with the plaintiff in order to make sure that the construction at hand was done safely and properly. In that case, the plaintiff failed to show that a valid contract did exist but the court found that the acts alleged by the defendant were reasonably justified. The court held that the interference was not improper because it was not done by unlawful means and not committed solely for the purpose of injuring the plaintiff. ... In Felsen, the defendants as the sole stockholder of Sol Cafe, had an existing economic interest in the affairs of Sol Cafe which it was privileged to attempt to protect when it interfered with plaintiffs contract of employment with Sol Cafe. ... 2d 248 (1999), the tortious interference claim was dismissed. ... The interference with the plaintiff’s contract with the third party was incidental to that lawful purpose. ... If J&G can reasonably show that their decision to terminate its distributor agreement with Splendide was solely to prevent further decline in its market share and that interference was not intentional but only incidental to its operating in the best interests of the company, then J&G can assert a defense of economic interest which Splendide will unlikely be able to overcome. CONCLUSION Splendide will probably not have a maintainable action for tortious interference with contract. ... In addition, based on what they have alleged, Splendide does not a have a maintainable cause of action for tortious interference with prospective contractual relations. ... MEMORANDUM TO: FROM DATE: RE: Splendide’s Potential Claim for Tortious Interference with Contract and/or Prospective Contractual Relations Against our Client, Jewels and Gym QUESTIONS PRESENTED I. Under New York law, tortious interference with contract requires an existence of a valid contract between plaintiff and third party, defendant’s knowledge of that contract, defendant’s intentional procurement of third party’s breach of contract without justification, actual breach of contract, and damages. ... department stores, did J&G, with knowledge of the existing contracts between Splendide and Macys and Splendide and Saks, intentionally and improperly interfere with those contracts in order to induce Macys and Saks to breach which resulted in an actual breach of contract? ... In an action for tortious interference with prospective contract rights, as distinguished from tortious interference with contract, where there is no breach of an actual contract but only interference with prospective contract rights, plaintiff must show more culpable conduct on the part of the defendant. At the time the January 10th letter was sent, Splendide and Nordstrom had had several contract negotiation meetings, but Nordstrom backed out of the most recent meeting scheduled for January 13, 2002. Did J&G improperly, dishonestly, or unfairly interfere with a prospective contractual relation between Splendide and Nordstrom that would have formed a contract had it not been for the conduct of our client? ... Under New York law, if a threat is made for a valid economic purpose and not with improper means or actuated by actual malice then a complaint for tortious interference will be insufficient. If what J&G wrote in its January 10th letter constitutes a threat or interference, J&G will have to show that it was economically justified in doing so and that it not employ improper means or actual malice. Does J&G have a viable defense for economic justification if Splendide does have a maintainable claim for tortious interference? ... In addition to acting within the terms of its contract, Jewels and Gym did not maliciously and improperly intend to interfere with Splendide’s contract. ... STATEMENT OF FACTS On January 15, 2002, Splendide served J&G, our client, with a summons and complaint commencing an action in New York Supreme Court, asserting three causes of actions: (1) breach of contract; (2) tortious interference with contract; and (3) breach of the duty of good faith and fair dealing. ... This memo analyzes whether Splendide’s claim of tortious interference with contract and prospective contractual relations will survive in a motion to dismiss by J&G. ... The most recent distributor contract was executed in January of 2001, and was set to expire in January of 2003. ... department stores under section 12 of their contract on finding its product being sold in discount stores. ... In addition, Splendide had had several contract negotiation meetings with the senior merchandising manager at Nordstrom who had carried a small line of WBW during the winter season but did not place a spring order. ... On January 13, 2002, Nordstrom’s senior merchandising manager cancelled a contract negotiation meeting with Splendide’s CEO scheduled for that day. ... It also alleges that although no contract existed with Nordstrom, there were several contract negotiation meetings going on and that J&G had interfered with a prospective contractual relation. ... Whether Splendide has a claim for Tortious Interference with Contract Under New York Law, in order to maintain a claim for tortious interference with contract, the plaintiff must prove (1) the existence of a valid contract between plaintiff and the third party, (2) defendant’s knowledge of that contract, (3) defendant’s intentional procurement of third party’s breach without justification, (4) the actual breach of the contract, and (5) damages resulting there from. ... In this case, a valid contract did exist between Splendide and both Macys and Saks. ... Defendant must have knowledge of the contract. It is unclear from the facts provided whether J&G had knowledge of those contracts, but for the purposes of this memo, knowledge is presumed. ... Even assuming that interference did occur, the interference must further be shown to be improper before recovery may be had. ... A court will most likely not allow a claim for tortious interference with contract in regards to the contracts with Macys and Saks, as J&G will demonstrate that there was no improper interference on their part and that there is no causal link between its actions and the breach of contract which occurred by Macys and Saks. A valid contract must exist and an actual breach must occur. ... Nordstrom did not have an actual contract with Splendide but had several contract negotiation meetings. (This will further be discussed in the Prospective Contract section. ... In Guard-life, the plaintiff who had an exclusive distributor agreement with a manufacturer brought an action for tortious interference with contract action against defendant who also entered into an exclusive distributor contract with knowledge of plaintiff’s contract. ... The Court of Appeals held that the manufacturer’s decision to withhold delivery of an order and not complete an obligation under the contract constituted a breach. ... Macy breached its contract on that same day. ... Courts have refined the standard over the years as to what constitutes interference. ... They have weighed a number of factors to determine whether interference is “improper” such as the nature of the conduct, the interest of the party being interfered with, and the relationship between the parties. ... 2d 583 (1996), the court held that economic interest is enough to overcome improper interference unless there is a showing of malice or illegality. J&G believed that it was within the terms of its contract to terminate on 30 days notice the exclusive distributor agreement with Splendide. ... The case law discussed above supports an argument that the actions of J&G did not constitute an improper interference. ... In light of this analysis, Splendide will probably not have a maintainable action for tortious interference with contract for failure to satisfy all the elements and therefore, fail to state a cause of action. ... Whether Splendide has a claim for Tortious Interference with a Prospective Contract New York law distinguishes tortious interference with prospective contract in that where there is no breach of an existing contract, but only interference with prospective contract rights, plaintiff must show more culpable conduct on part of the defendant that is required when existing contract has been breached. ... Splendide must show that J&G used wrongful means or was acting solely to harm Splendide and that but for J&G’s actions Nordstrom would have entered into the contract. ... The court found that there was no interference with prospective business relations by sending a letter, which contained no actionable misrepresentation, to target corporation’s board for not getting a chance to submit a revised bid before rival’s bid was accepted by the board. It also held that wrongful means includes physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure, although they do not include persuasion alone even though knowingly directed at interference with contract. ... Nordstrom did not currently have a written contract with Splendide at the time the letter was sent. ... Although there was no written contract, several contract negotiation meetings had taken place between the two companies. ... J&G believed it was well within its contract to terminate the agreement with a 30 days notice. ... Although Nordstrom cancelled a contract negotiation meeting, no other department stores cancelled their outstanding orders. ... Splendide may be able to show that there is a causal link between the letter sent and the decision by Nordstrom to cancel their contract negotiation meeting. They must show that Nordstrom would have entered into the contract but for the actions of J&G they did not. ... Here, a claim for tortious interference with a prospective contract will probably not succeed for failure to show the use of wrongful means, a sole intent to injure the plaintiff, and a clear causal relationship between the defendant’s actions and the actions of the third party. Based on what they have alleged, Splendide does not have a maintainable cause of action for tortious interference with a prospective contract. ... Whether Splendide has a viable defense to Tortious interference with Contract. New York law has allowed economic justification to negate improper interference. ... If J&G can reasonably show that their decision to terminate its distributor agreement with Splendide was made in order to prevent further decline in its market share and that interference was not intentional but incidental, then they may be able to assert the defense of economic justification. ... In Foster, the court held that economic interest is a defense to an action for tortious interference with a contract unless there is a showing of malice or illegality.