Inducing Breach of Contract
There has been a lot of buzz in the Toronto media for the past few days over an offer by Ashley Madison to advertise on Toronto Transit Commission buses or streetcars. For those who don’t know, Ashley Madison is, for lack of a better expression, a dating service for people who are married who want to cheat on their spouses. I have to admit that I am not a member of Ashley Madison so I do not know exactly how they work. However, as a natural-born nightowl, I see their commercials often on late night TV and have always wondered if they are open to a lawsuit. The claim would be for inducing breach of contract and the claim would be made by one or both of the spouses who were cheated on.
Now, if nothing else, it would appear that Ashley Madison has a niche market and most small businesses would not have to worry about claims from innocent spouses, but it provides a good excuse for me to explain the law of inducing breach of contract. As described in a court case earlier this year, to successfully claim for someone inducing breach of a contract the plaintiff must establish:
An example of where this might occur would be where Company A has a long-running supply arrangement with Company B. Company C comes along, knows of this arrangement, and purposely tries to “undercut” Company A in an attempt to steal away the business of Company B. As you can see from the requirements, in this example Company C has to not only know of the contract, but it must go to Company B with the intent of causing (and, in fact, causes) Company B to breach its contract with Company A. Not the easiest thing in the world to prove. However, in today’s economic climate where more companies are fighting to get smaller shares of existing work, claims for inducing breach of contract may become more common.
So, if you are considering going after new business with a potential customer who has been involved in a long-term supply or other relationship with a competitor, you may want to be more cautious about your sales pitch. Similarly, if you find that your customer with whom you have long-term contract suddenly decides to go with someone else, you may have a claim not only against the customer for breach of contract, but also against your “replacement” for causing the customer to breach the contract.
Something to think about. … And if there are any disgruntled spouses with lots of money to spend on litigation who want to take on Ashley Madison (which seems to have lots of money to fight the lawsuit based on what they were offering to the TTC to advertise on the buses), then give me a call as that would be a very interesting case to take – assuming you could prove that your spouse wouldn’t have left you if it hadn’t been for Ashley Madison’s “assistance” (and good luck proving that).
CALC