2.2.3 Contracts Terminable at Will

• Jurisdiction: Arizona

The Courts have long recognized that contracts terminable at will are entitled to protection from interference by third parties. The rationale is that until the contract is terminated by the parties, it is a subsisting relation of value to the parties that will continue in effect.[fn105]

The Arizona Supreme Court has stated the rule as follows:[fn106]

By 1939, the common law, as stated by the American Law Institute, recognized liability for interference with contracts terminable at will. Restatement of Torts § 766, comment c. This rule has not changed; until an at-will contract is terminated, it is "valid and subsisting, and the defendant may not improperly interfere with it." Restatement (Second) of Torts § 766, comment (emphasis supplied). Thus, a cause of action in tort is available to a party to any contract, at-will or otherwise, when a third party improperly and intentionally interferes with the performance of that contract.

Contracts terminable at will — other than employment contracts — normally involve agreements which by their terms grant one or both of the parties to a contract the option of terminating the agreement upon notice. Such terminable contracts may include a lease terminable upon sale,[fn107] or an exclusive territorial agreement terminable upon notice,[fn108] or the attorney-client contract terminable by the client.[fn109] Until such contracts are declared void or are terminated by the parties, they remain valid, existing and subsisting agreements, and any improper interference by a third party is...