If one party intentionally induces or procures another to breach a contract and damage is caused then that can form the basis of a legal claim. If the action of the inducing party cannot be justified, they may be liable for a claim under the tort of inducing or procuring a breach of contract.
The earliest authority for this type of claim was Lumley v Gye [1853].
Lumley v Gye [1853]
In Lumley v Gye, Johanna Wagner had a contract to sing exclusively for Benjamin Lumley at Her Majesty's Theatre for a three month period. Frederick Gye, who ran Covent Garden Theatre, persuaded Ms Wagner to break her contract with Mr Lumley and sing for him instead. Despite an injunction being put in place, Ms Wagner sang at the Covent Garden Theatre and Mr Lumley sued Mr Gye for procuring a breach of contract.
This tort is still commonly used in cases where employees have been induced to breach their employment contracts by a third party with some sort of pressure or other incentive. It offers a particularly useful alternative for employers who may not wish to use the conventional breach of contract action against an employee who may not be of significant means.
Requirements
In order to pursue a claim for inducing a breach of contract the claimant must first be able to show:
- The existence of a contract
- A breach of that contract
- That the defendant's conduct procured the breach
- The defendant had knowledge that it was inducing a breach of contract
- That there was intention to procure a breach of contract
The nature of the contract is immaterial as long as it is legally valid. The requirement that a breach has actually occurred is important because the liability is derived from that breach. The inducement to breach the contract can include any sort of influence, persuasion or pressure. It can therefore include positive incentives or threats and can be made directly or indirectly. Even tacit encouragement will be enough.
Intention
More recent cases, in particular OBG Ltd v Allen [2007], established the importance of intention on the part of the defendant. Although there is no requirement for economic harm to be intended, the defendant must have actually known of the contract and intended it to be breached. Constructive knowledge is not enough.
If you have any questions about how inducing breach of contract might affect your business Rollingsons has experienced lawyers who can assist you. For more information please contact James Crighton JCrighton@rollingsons.co.uk via e-mail or by telephone on 0207 611 4848.
