California First-Year Law Students' Exam (Baby Bar) — MCTortsHard
A former employee, angry about being fired, secretly accessed their old company's client database and emailed several key clients, falsely stating that the company was going out of business and urging them to switch to a competitor. The company lost significant business as a direct result. Which tort is the former employee most likely to be liable for?
- AInterference with Prospective Economic Advantage
- BInterference with Contractual Relations
- CMisrepresentation
- DDefamation
Show answer & explanationAnswer & explanation
Correct answer: B. Interference with Contractual Relations
Interference with Contractual Relations (or Inducing Breach of Contract) occurs when a third party intentionally and improperly interferes with an existing contract between two other parties, causing one party to breach or making performance more difficult. The employee's actions, knowing of the existing client contracts, intentionally induced those clients to switch, fitting this tort.
Why the other options are wrong
- A. Interference with Prospective Economic Advantage applies to *expectancy* of future contracts, not existing ones, making it less precise than contractual relations.
- C. Misrepresentation (fraud) is a component of the employee's action, but the overall tort that captures the harm to the business relationships is interference.
- D. While the statements are false, the primary harm here is the disruption of existing business relationships, making Interference with Contractual Relations a more precise fit than general defamation.
Interference with Contractual Relations
A tort that occurs when a third party intentionally and improperly interferes with an existing contract between two other parties, causing one party to breach or making performance more difficult.
- Requires an existing valid contract.
- Defendant must know of the contract.
- Defendant must intentionally induce breach or disrupt performance.
- Defendant's conduct must be improper (e.g., fraudulent, illegal, malicious).
Memory trick: I-C-P: Interfere with Contracts or Prospect.