What it is
Tortious interference is a tort, not a contract claim. A breach-of-contract claim is brought by one party to a contract against the other; tortious interference is brought by a party to a contract against a third party who caused the breach. The doctrine recognizes that contract relationships are valuable and that intentional, improper interference with them can be the proper subject of legal redress.
Pennsylvania recognizes two related claims:
1. Tortious interference with an existing contract — interference with a contract that has already been formed 2. Tortious interference with prospective contractual relations — interference with a deal that has not yet been formalized but had a reasonable likelihood of consummation
The two claims share most of their elements, but interference with a prospective relationship has additional requirements (the relationship must be more than speculative).
The principal defenses are privilege and proper conduct. A competitor who lawfully solicits customers from a rival is engaging in privileged conduct, even if those customers terminate contracts with the rival. The line between privileged competition and unlawful interference is heavily fact-dependent.
Where it comes from
- Foundational case law: Adler, Barish, Daniels, Levin & Creskoff v. Epstein, 482 Pa. 416 (1978) — adopted the Restatement (Second) of Torts §§ 766-768 framework
- Restatement (Second) of Torts § 766: elements of tortious interference with contract
- Restatement (Second) of Torts § 768: privilege of competition
- Statute of limitations: 42 Pa. C.S. § 5524 — 2 years
The PA Supreme Court has applied and refined the framework in cases including Pelagatti v. Cohen, 536 A.2d 1337 (Pa. Super. 1987), and CGB Occupational Therapy v. RHA Health Services, 357 F.3d 375 (3d Cir. 2004), applying PA law.
Who it applies to
The elements of tortious interference with an existing contract:
| Element | What plaintiff must prove |
|---|---|
| Existence of a contract | A valid contract between the plaintiff and a third party |
| Defendant's knowledge | The defendant knew of the contract |
| Intentional interference | The defendant intended to cause the contracting party to breach |
| Causation | The interference caused the breach |
| Absence of privilege | The defendant's interference was not justified or privileged |
| Damages | The plaintiff suffered concrete harm |
For interference with prospective contractual relations:
| Additional element | What plaintiff must prove |
|---|---|
| Reasonable expectation | A specific, reasonably probable future contract — not merely a hope or possibility |
The "absence of privilege" element is the heart of most cases. PA recognizes several privileges that defeat tortious-interference claims:
- Competition — soliciting customers from a competitor is generally privileged
- Financial interest — a person with a legitimate financial interest in the contract (e.g., a partner, parent company) can intervene without liability
- Business advice — giving honest advice that leads to a breach can be privileged
- Truth — communicating accurate information that leads to a breach is generally privileged
- Public-interest considerations — interference for legitimate public-policy reasons may be privileged
The plaintiff bears the burden of showing the defendant's conduct was not privileged.
What it means in practice
Scenario 1 — Customer poaching. Two competing software companies serve overlapping markets. A salesperson at Company A learns that Company B has a 5-year contract with a major customer. The salesperson aggressively solicits the customer, ultimately convincing it to breach the Company B contract and switch to Company A. Privilege analysis: Competition is privileged. As long as Company A's solicitation was through ordinary competitive means (offering better terms, demonstrating better service), the conduct is privileged even though it caused a breach. If Company A used improper means — disclosing trade secrets, using confidential information, defamation, fraud — the privilege does not apply.
Scenario 2 — Defamation-driven interference. A consulting firm has a long-term contract with a corporate client. A competitor of the consulting firm tells the client (falsely) that the consulting firm is being investigated by federal regulators for fraud. The client terminates the contract. The competitor's defamation removed any privilege. The consulting firm has both a defamation claim and a tortious-interference claim — the false statements were the means by which the interference occurred.
Scenario 3 — Prospective relationship. A real-estate agent has been negotiating a $2 million transaction for over six months. A rival agent — knowing of the negotiation — interferes with the buyer to redirect the transaction through the rival, undercutting the original deal. The original agent sues for interference with prospective contractual relations. He must show (1) a specific, reasonably probable transaction; (2) the rival's knowledge; (3) intentional interference; (4) absence of privilege; and (5) damages. Mere "I was hoping to close a deal someday" is not enough — the prospect must be specific and reasonably probable.