It’s often said that “it’s a cut-throat world,” “life is not fair,” and that in order to survive you must hustle. While there is certainly truth to these concepts, taking your actions to the extreme, however, and proceeding with reckless abandon may result in liability for you and/or your company.
Iowa law protects Iowa businesses from people improperly interfering with contracts. For example, let’s say you own or work for ABC Corp. and you have successfully secured a supply contract with Supply Co. Supply Co. supplies widgets to your company that are essential for your business. One day, your competitor, Interference Corp., learns of your contract with Supply Co. and decides to contact Supply Co. in an effort to cut off or otherwise interfere with your contract (perhaps by impacting your supply of widgets or pricing). Interference Corp. may have asked Supply Co. to stop supplying you with widgets or may have offered to enter into an exclusive relationship whereby Supply Co. would only supply widgets to Interference Corp. but not a single widget to you. Either way, as a result of Interference Corp.’s actions, Supply Co. terminates its contract with you, refuses to supply you with widgets or otherwise increases your pricing for the same widget. Consequently, you are now unable to fulfill orders and your business tanks. Do you have a right to relief?
As stated above, Iowa law protects Iowa businesses from people improperly interfering with contracts. The Iowa Supreme Court has set forth five (5) elements that must be proven in order to establish Interference Corp. wrongfully interfered with your contract such that they may be liable to you for your damages:
The elements of the tort of intentional interference with an existing contract are:
(1) plaintiff had a contract with a third-party; (2) defendant knew of the contract; (3) defendant intentionally and improperly interfered with the contract; (4) the interference caused the third-party not to perform, or made performance more burdensome or expensive; and (5) damage to the plaintiff resulted.
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