Legal Definitions - procurement of breach of contract

Procurement of Breach of Contract, also commonly known as tortious interference with contractual relations, refers to a situation where a third party, who is not part of an existing contract, intentionally persuades or induces one of the parties to that contract to break their agreement. For this legal claim to arise, the third party must have known about the contract and deliberately acted to cause its breach, resulting in harm to the non-breaching party.

Essentially, it's about someone outside a deal deliberately meddling to cause one side to back out, leading to financial or other damage for the other side.

• Example 1: Employee Poaching

  Imagine "Tech Innovations Inc." has a highly skilled software engineer, Sarah, under a two-year employment contract that includes a non-compete clause preventing her from working for a direct competitor for one year after leaving. "Future Systems Corp.," a rival company, knows about Sarah's contract and her non-compete agreement. Despite this knowledge, Future Systems Corp. actively recruits Sarah, offering her a significantly higher salary and a signing bonus, specifically encouraging her to leave Tech Innovations Inc. immediately, even if it means breaching her current contract. Sarah accepts the offer and resigns from Tech Innovations Inc., violating her contract.

  How this illustrates the term: Future Systems Corp. is the third party that intentionally induced Sarah (one party to the contract) to breach her employment agreement with Tech Innovations Inc. (the other party). Future Systems Corp. knew about the existing contract and deliberately acted to cause its termination, potentially causing financial harm to Tech Innovations Inc. by losing a key employee and violating the non-compete.

• Example 2: Supplier Agreement Interference

  A small bakery, "Sweet Treats," has an exclusive contract with "Grain Millers Co." to supply all its specialty flour for three years. "Flour Power Inc.," a larger competitor of Grain Millers Co., learns about this exclusive arrangement. Wanting to capture Sweet Treats' business, Flour Power Inc. approaches the bakery owner and offers to supply flour at a much lower price, promising faster delivery and better credit terms, on the condition that Sweet Treats immediately cancels its contract with Grain Millers Co. Sweet Treats, enticed by the offer, terminates its agreement with Grain Millers Co. prematurely.

  How this illustrates the term: Flour Power Inc. is the third party that intentionally interfered with the contract between Sweet Treats and Grain Millers Co. By actively persuading Sweet Treats to break its exclusive supply agreement, Flour Power Inc. procured a breach of contract, causing potential financial loss and disruption for Grain Millers Co.

• Example 3: Real Estate Development Sabotage

  "Urban Developers LLC" has a binding contract to purchase a specific plot of land from "Landowner Estates" for a new residential project. The contract includes a clause that if the sale does not close by a certain date, Urban Developers LLC will incur significant penalties. "Rival Builders Inc.," a competitor, discovers this contract and, wanting to acquire the same land for their own project, secretly contacts Landowner Estates. Rival Builders Inc. offers Landowner Estates a slightly higher price and promises to close the deal much faster, explicitly advising them to delay or refuse to cooperate with Urban Developers LLC's closing procedures, thereby causing Urban Developers LLC to miss its deadline and breach its purchase agreement.

  How this illustrates the term: Rival Builders Inc. is the third party that deliberately induced Landowner Estates to breach its contractual obligations with Urban Developers LLC. By actively encouraging Landowner Estates to sabotage the closing process, Rival Builders Inc. procured the breach of the land purchase contract, causing financial harm and project delays for Urban Developers LLC.