Interference with contractual and business relationships

A recent Texas Supreme Court case offers some insights.

by Ron Walker   In a recent case (Wal-Mart Stores, Inc., et al vs. Sturges, et al) the Texas Supreme Court discussed the difference between claims that allege interference with a contract and claims that allege interference with prospective business or contractual relationships.

Under the first claim, interference with an existing contract, the plaintiff must typically prove:

1. the existence of a binding contract;
2. that another person willfully induced or purposely caused a party not to perform;
3. the interference was intended to cause harm; and
4. the person inducing the breach or harm did not have a privilege or justification for his action.

To recover under the second claim, interference with prospective business relationships, the claimant must prove that he was harmed by the defendant’s conduct, and the defendant’s conduct must have been independently tortious or unlawful. The Supreme Court gave the example that a person who threatens a customer with bodily harm if he did business with another person is liable under an interference with prospective business claim. Whereas, a person who competes legally for business, is not liable under such a claim. The Supreme Court stated: "In a society built around business competition, interference with prospective business relations has never been thought to be wrongful in and of itself."

One may surmise that under either situation, an interference claim cannot rest simply on the basis of competition.

In the case before the Supreme Court, a tract of land adjacent to but not owned by a Wal-Mart store was burdened by restrictions under which Wal-Mart controlled, to a degree, any modification to the existing site plan for the adjacent tract. A prospective purchaser of the adjacent tract sought a modification to the site plan from Wal-Mart to build (for a single-use tenant) a larger building than the site plan permitted. At the same time, Wal-Mart had considered either moving or expanding its existing facility. Expanding its existing facility required Wal-Mart to purchase the adjacent tract.

Wal-Mart denied the request to modify the site plan and instructed its agent to notify the prospective single tenant that if Wal-Mart could not acquire the adjacent tract, Wal-Mart would move. The prospective tenant canceled its intent to lease the tract from the prospective purchaser because it wanted to be located adjacent to Wal-Mart. The prospective purchaser then opted out of the contract to purchase the adjacent tract. The prospective purchaser sued Wal-Mart for interfering with its prospective lease to the prospective single-use tenant.

Ron Walker is director of legal affairs for TAR.

Two people from each TAR member office can access the TAR Legal Hotline. For more information about this free member service, call 800/873-9155 or visit the Legal section of the members-only pages of www.tar.org.

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