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Business disputes often entail interference with contract

| Nov 13, 2014 | Business Litigation |

An active area of business litigation in North Carolina and elsewhere deals with interference with a contract or interference with business relations. Although we think of business disputes as contractual breaches, when a person interferes with the contractual or other business relations of two entities, this is treated as a tort action. The essence is that it is an actionable wrong for anyone without authority to interfere with the business transactions occurring between other entities.

The concepts are closely related, and the tort may have different names from state-to-state. The essential interest being protected is the right of business entities to contract and do business together without unauthorized outside interference. Closely related to this tort is the tort of defamation. One who interferes in the business relations of others will often use defamatory declarations about one of the parties to get the other party to stop dealing with the defamed party.

These elements appear to be present in a case in Texas where a timeshare company is suing a so-called consumer advocate company called “Advocate for the Consumer.” The timeshare claims that the defendant is a sham company and is not organized to protect consumers. Instead, its mission is to interfere with the business relations of the plaintiff and other timeshare companies, according to the complaint. It’s alleged that the defendant company communicated with the customers of the timeshare company and offered to get them out of their contracts for a fee.

In doing so, it’s alleged that the interfering company issued defamatory statements about the plaintiff to the plaintiff’s customers. The defendant’s fees were about $1,500, and instead of providing some service for the funds, the company simply urged the customer to breach its contract with the timeshare plaintiff, according to the complaint. The would-be consumer advocate company has also been sued by that state’s Attorney General on similar accusations. In North Carolina and elsewhere, business disputes caused by similar actions may also be violations of various state laws that protect against fraudulent business practices.

Source: Courthouse News Service, “Timeshare Firm Goes After ‘Watchdog’“, David Lee, Nov. 7, 2014

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