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Tort of Inducing Breach of Contract

The tort of inducing breach of contract occurs when a defendant knowingly causes a party to breach an existing contract, resulting in loss for the claimant. Key elements the claimant must prove are: a contractual obligation existed; the defendant induced breach directly or indirectly; the defendant knew of the contract; the defendant intended to cause a breach; the claimant suffered loss due to the breach; and the defendant has no justification. Inducement can be direct or indirect through unlawful means. The defendant must know of the contract's existence, but not necessarily have actual knowledge. The claimant must also prove the defendant intended to procure the breach as an end or means, and suffered damage due to the breach. The defendant may avoid liability by providing justification

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87 views3 pages

Tort of Inducing Breach of Contract

The tort of inducing breach of contract occurs when a defendant knowingly causes a party to breach an existing contract, resulting in loss for the claimant. Key elements the claimant must prove are: a contractual obligation existed; the defendant induced breach directly or indirectly; the defendant knew of the contract; the defendant intended to cause a breach; the claimant suffered loss due to the breach; and the defendant has no justification. Inducement can be direct or indirect through unlawful means. The defendant must know of the contract's existence, but not necessarily have actual knowledge. The claimant must also prove the defendant intended to procure the breach as an end or means, and suffered damage due to the breach. The defendant may avoid liability by providing justification

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Adel Bull
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© © All Rights Reserved
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Available Formats
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TORT OF INDUCING A BREACH OF CONTRACT

The Tort of Inducing a breach of contract arises when the defendant knowingly induces a party
to breach an existing contract with the Claimant for which loss was suffered. In establishing this
tort, the Claimant must prove the essential elements of the said tort, to wit: that there was a
breach of a contractual obligation, that the Defendant induced the said breach either directly or
indirectly (otherwise by industrial action), that the Defendant knows of the contract, that the
Defendant intends for the contract to be breached, that the Claimant have suffered loss as a
consequence of the said breach and that the Defendant has no justification whatsoever to
eschewed liability-LUMLEY GYE (1853) 2 E & B 216

Of importance as aforesaid is that, the inducement need not only be done directly, the
inducement may also be done by indirect means. However, for such inducement to be actionable,
it must have been done through unlawful means. - J T STRATFORD & CO. V. LINDLEY
(1965) AC 269 In the referred case, the House of Lords held there was an inducement to a breach
of contract by Waterman’s Union members with their employers which made it impossible for
their employers to keep contracts with their customers and that such had been achieved by
unlawful means.

Further, the requirement that the Defendant must have knowledge of the existence of the contract
do not necessarily need to be actual knowledge, it may well be constructive knowledge. It is also
important for the Claimant to show that the Defendant knew that he was procuring a breach.
Lord Hoffman in OBG LIMITED v. ALLAN [2008] stated “To be liable for inducing breach of
contract, you must know that you are inducing a breach of contract. It is not enough that you
know that you are procuring an act which, as a matter of law or construction of the contract, is a
breach. You must actually realise that it will have this effect. Nor does it matter that you ought
reasonably to have done so”.

Additionally, in proving that the Defendant intended to cause a breach of the existing contract,
proof that the said inducement was done mala fide or with malice is wholly immaterial. the
Claimant is however required to establish that the Defendant intended to procure the breach and
importantly, on the authority of OBG LIMITED v. ALLAN supra, the breach of contract should
be shown to be an end in itself or a means to an end for liability to be imposed on the defendant

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but if shown to be merely a foreseeable consequence of actions undertaken, then it cannot be said
that the breach of contract was intended.

Of great importance, is that the proof of damage or loss suffered as a consequence of the breach
of contract induced by the Defendant. Failure by the Claimant to satisfy this requirement, renders
the inducement as a non-actionable inducement -JONES BROS (HUNSTANTON) LTD V.
STEVENS [1955] 1QB 275. It must be noted however, that the Defendant can avoid liability in
such an action where he is able to provide justification for his action which is rarely the case.
Where justification is provided, that can amount to a defence to an action for inducing a breach
of contract as was the case in BRIMELOW V. CASSON 1924 1 CH 302 where the justification
of prostitution inter alia, was provided by the Trade Union representing theatrical workers as the
reason for inducing the said breach which said justification was countenanced by the court.

In support of the above, reliance is placed on the judgement of the court in the case of NISSAN
(NIG) LTD MR. S YOGANATHAN AND ANOTHER 2010 4 NWLR PT 1185, 153-154
where it was held “where the 3rd Party knowingly and without justification facilitated or
intentionally induced the breach of the contract between the contracting parties, he is liable for
inducing or procuring breach of contract”

CONCLUSION
In view of the foregoing, it is my considered opinion that the where the Claimant establishes the
above elements, damages will be awarded or an injunction granted in his favour depending on
the circumstances, otherwise, the action will fail.

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Common questions

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Courts differentiate between a breach being a means to an end versus a foreseeable consequence by examining the Defendant's intent and knowledge. The determination involves assessing whether the Defendant intended the breach to occur as part of their objective or strategy, rather than just recognizing it as an inevitable result. The presence of deliberate actions aligning with the breach suggests it was used as a means to an end . If it was incidental or unintended despite being predictable, it may not meet the threshold for liability .

A Claimant can strengthen their case by clearly proving all elements of the tort, such as establishing the Defendant's knowledge and intent, showing unlawful means were employed, and demonstrating tangible loss or damage. Collecting evidence that strongly links the Defendant's actions to the breach and crafting an argument that anticipates potential defenses like justification is also crucial. Examples from case precedence, like J T STRATFORD & CO. v. LINDLEY, or emphasis on any breaches used as ends in themselves can further solidify the Claimant's stance .

Demonstrating loss or damage is critical because it substantiates the injury that the Claimant suffered due to the Defendant's actions, making the inducement actionable. If the Claimant fails to prove loss or damage, the inducement becomes non-actionable, as illustrated in the case JONES BROS (HUNSTANTON) LTD V. STEVENS [1955]. Lacking evidence of damage or loss undermines the whole premise of the claim by failing to establish a causal link between the Defendant's actions and the alleged harm .

The inclusion of 'unlawful means' reflects the requirement that inducement involves an illegitimate act, which goes beyond mere persuasion or influence. Unlawful means must disrupt the performance of a contract through illegal or impermissible methods to establish liability. Direct inducement might not suffice if it lacks unlawful means; liability generally necessitates some level of legal or unethical impropriety that unfairly interferes with the contractual relationship .

In the tort of inducing breach of contract, the Defendant's knowledge can be actual or constructive. Actual knowledge means the Defendant is explicitly aware of the contract, while constructive knowledge allows for the possibility that the Defendant should reasonably have known about the contract's existence. This means liability does not necessitate the Defendant's direct admission of awareness; it can extend to situations where the Defendant should have known, emphasizing the broader scope of knowledge in liability cases .

To establish the tort of inducing a breach of contract, the Claimant must prove that there was a breach of a contractual obligation, the Defendant induced the breach either directly or indirectly, the Defendant knew of the contract, the Defendant intended the contract to be breached, the Claimant suffered a loss as a consequence of the breach, and that the Defendant has no justification for inducing the breach . The significance of unlawful means in this context is that the inducement must be effected through unlawful means to be actionable, as exemplified in the case of J T STRATFORD & CO. V. LINDLEY [1965] where such means were integral to the court's decision .

An act may be considered as inducing a breach of contract if the breach was foreseeable as a consequence, even if not directly intended. If the Defendant's action indirectly leads to a contract's breach through unlawful means, liability may still arise if it was shown that the act had the effect of causing the breach as an intended outcome or was used to achieve a larger goal, not merely as an unintended consequence .

Knowledge and intention are crucial in determining liability for inducing a breach of contract. The Defendant must know that they're inducing a breach of contract, not just performing an act which happens to result in a breach. It requires actual realization that the act will induce a breach. Additionally, it must be shown that inducing the breach was the end itself or a significant means to an end, rather than merely a foreseeable consequence .

A Defendant may avoid liability by showing that their actions were justifiable under some overarching legal or moral ground; however, this defense is rarely successful. To succeed, the Defendant must demonstrate a legitimate reason that resonates with public interest or higher legal principles, such as preventing harm as recognized in BRIMELOW V. CASSON. Due to the stringent requirements for such justification to align with broader interests, it is infrequently used as a viable defense .

Justification serves as a potential defense for the Defendant in an action for inducing a breach of contract. If the Defendant can provide a legitimate justification for their actions, it can negate liability. In BRIMELOW V. CASSON, the Defendant, a Trade Union, provided justification in the form of abating prostitution as a reason for inducing a breach, which was recognized by the court and served as a defense .

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