Tortious Interference Law in Colorado: a Practitioner's Guide

• Publication year: 2001
• Pages: 73

30 Colo.Law. 73 Colorado Lawyer 2001.

2001, August, Pg. 73. Tortious Interference Law in Colorado: A Practitioner's Guide

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73

Vol. 30, No. 8, Pg. 73

The Colorado Lawyer
August 2001
Vol. 30, No. 8 [Page 73]

Specialty Law Columns
Business Law Newsletter
Tortious Interference Law in Colorado: A Practitioner's Guide
by Jeanine M. Anderson

Colorado recognizes the companion torts of interference with contract and interference with prospective business relation.1 Thus, in Colorado, a third person may be liable when, by inducement or other means, the person either (1) intentionally and improperly procures the breach of a contract, or (2) prevents the formation of a contract.2

This article analyzes the elements of the causes of action for these torts in Colorado and examines the defenses to those claims. The article also addresses the damage principles relevant to both types of tortious interference claims

Tortious Interference With Contract

Colorado has adopted the approach to tortious interference with contract set forth in Restatement (Second) of Torts ("Second Restatement").3 Second Restatement § 766 defines the tort of interference with contract as follows

One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for pecuniary loss resulting to the other from the failure of the third person to perform the contract.4

Therefore, to prove tortious interference with contract under Colorado law, a plaintiff must show: (1) a valid contract (2) the defendant knew or reasonably should have known of the contract; (3) the defendant intended to induce a breach of the contract; (4) action by the defendant that induced a breach of the contract; (5) the defendant's interference was improper; and (6) the defendant's interference caused damages.5 Each of the elements is discussed below.

Valid Contract

The first element of the cause of action is a valid, binding contract. The particular contract must be in force and effect at the time of the breach. If it is void for any reason, there can be no cause of action for causing its breach.6 It is not necessary, however, that the contract be legally enforceable against the third party.7 A promise may be a valid and subsisting contract, even though it is voidable. The third party may have a defense against an action on the contract that would permit the third party to avoid the contract and escape liability. Until the third party decides to void the contract, however, it is a valid and subsisting relation, and a Colorado defendant is not permitted to interfere improperly.

Thus, the third party may be in a position to avoid liability for breach by reason of the statute of frauds, formal defects, lack of mutuality, infancy, unconscionable provisions, conditions precedent to the obligation, or even uncertainty of particular terms. However, a defendant is not free to interfere with performance of the contract before liability is avoided.8

Knowledge of Contract

The second element is that the defendant knew or reasonably should have known of the contract with which he or she is interfering. A plaintiff is not required to show actual knowledge to prove intentional interference with contract. Instead, a plaintiff must show that the defendant "had knowledge of facts which would lead him to inquire as to the existence of the contract."9

Intent to Induce Breach

The third element of the claim requires that the defendant intended to induce the breach. For purposes of the tort, a defendant acts intentionally "when he acts or speaks for the purpose, in whole or in part, of bringing about a particular result, or if he knows his acts or words are likely to bring about that result."10 It is not necessary that the defendant act or speak with malice or ill will, but the presence or absence of malice or ill will may be considered in determining if the conduct was intentional.11

Breach of Contract

The fourth element is an actual breach of the contract. To satisfy this element, a technical breach is not required.12 If a plaintiff can establish each of the other elements of tortious interference with contract, plus adverse impact on the contract short of an actual breach, the defendant will be liable.

Interference Improper

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