Templars Thought Leadership – Inducing Breach of Contracts

Companies occasionally seek to exit contractual obligations for more favourable contracts, even if such means breaching their existing contracts.

Companies are also known to exploit such situations by offering better deals/terms to potential counterparties who are already contractually bound to others.

Although this may be justifiable on the ground of economics, it is not without legal consequences.

Ordinarily, an action for a breach of a contract lies solely against a person that is a party to such a contract, while a non-party can neither sue nor be sued, however, the common law tort of inducing breach of contracts was introduced to create legal liability for a non-party to a contract who contributed to or caused its breach.

This article discusses inducement of breach of contract as a cause of action and highlights what a prospective claimant must show to successfully obtain remedy against a non-party for inducing breach of contracts.