I) Direct Inducement to Breach a Contract

Any direct inducement to breach a contract is actionable. The essential elements of the tort are a direct inducement to breach the contract, knowledge of the contractual link on the part of the defendant, an intention to secure a breach of contract, and damage. Justification is a defence.

The defendant must directly induce a breach of contract. Any conduct that evidences an intention to encourage, persuade, cajole, or convince a person to breach her contract is sufficient. In Lumley, for example, the defendant offered Miss Wagner more money to sing for him. [Note 191: D.A. Howarth, Textbook on Tort (London: Butterworths, 1995) at 474.] Examples of other direct inducements include words of encouragement, threats, incentives, entering into contractual arrangements with another person which, to the knowledge of the defendant, are incompatible with the person's contractual obligations to the plaintiff, and giving reasons why another party should breach her contract. There is, however, no liability for merely providing information about various options, including breach, so long as it is given in a dispassionate and neutral manner and does not seek, even in a subtle way, to pressure or encourage the contracting party to breach her contract.

The courts have been sensitive to the position of lawyers and other professional advisers acting in the course of their professional duties. A lawyer may advise a client of the possibility and consequences of a breach of contract and a physician may discuss the inadvisability of continuing stressful employment without liability. The client or patient is, of course, liable for breach of contract if she chooses to commit a breach of contract. Special leniency has also been extended to the directors of corporations who decide in good faith that it is not in the best interests of their corporation to perform a contract. They will not be liable for inducing the corporation to breach the contract unless they are not acting in the best interests of the corporation and are predominantly motivated by a desire to advance their personal interests or to harm the plaintiff. The plaintiff's remedy lies in an action for breach of contract against the corporation. [Note 192: See Klar, above note 8 at 501-2.]

The defendant must have knowledge of the contractual relationship that is broken. In Lumley, for example, the defendant knew of the contract because he was the manager of a rival opera company. He knew that Miss Wagner would have to breach her contract if she were to leave the plaintiff and sing for him. Knowledge of the precise terms of the contract need not be known but the defendant must be aware that his conduct will result in the breach of a contractual relationship. Wilful blindness to the existence of the contract may also be sufficient but there is no general obligation on a prospective contractor to inquire actively if proposed contracts will result in the breach of existing contractual arrangements between the negotiating party and a third party.

The defendant must have an intention, actual or constructive, to secure a breach of contract. There is, however, no need to prove that the defendant intended to harm the plaintiff. The defendant is, as appears to have been the case in Lumley, often motivated more by a desire to advance his own interests than to damage those of the plaintiff. This is not a defence when those interests are advanced by deliberately securing a breach of contract. One Canadian decision [Note 193: Nicholls v. Richmond (Township of) (1983), 145 D.L.R. (3d) 362 (B.C.C.A.).] suggests that there may be liability for a direct negligent inducement to breach a contract but it has gathered little support. [Note 194: See Yellow Submarine Deli Inc. v. A.G.F. Hospitality Associates Inc. (1998), 118 Man. R. (2d) 270 at 272 (C.A.), Twaddle J.A.] The general view is that such cases are better resolved within the tort of negligence in a manner that is consistent with the developing liability for the negligent infliction of economic loss. [Note 195: See Klar, above note 8 at 501.]

The tort is actionable on proof of damage which, in most cases, is the loss of the contractual bargain. The loss is also recoverable by the plaintiff against the contract breaker. [Note 196: The plaintiff may not, however, recover double damages.] There may, however, be advantages to suing in tort. In tort, damages are "at large," which permits the court to take into account the conduct of the defendant and to compensate for any loss of commercial reputation by the plaintiff. The tort action is also advantageous where the contract breaker is insolvent, where punitive damages that are available only in contract in limited circumstances [Note 197: See Vorvis v. Insurance Corp. of British Columbia, [1989] 1 S.C.R. 1085. ] are warranted, or where there are procedural obstacles to the contract action.

Justification is a defence to the direct inducement to breach of contract, but there is little useful modern authority. [Note 198: The landmark authorities are Glamorgan Coal Co. v. South Wales Miner's Federation, [1903] 2 K.B. 545 (C.A.), aff'd (sub nom. South Wales Miners' Federation v. Glamorgan Coal Co.) [1905] A.C. 239 (H.L.); Brimelow v. Casson, [1924] 1 Ch. 302; and Hill (Edwin) & Partners v. First National Finance Corp. (1988), [1989] 1 W.L.R. 225 (C.A.). ] What there is suggests, first, that it has a narrow scope (which is not surprising given the public interest in the integrity of contractual links); second, that the absence of malice or bad faith is insufficient to establish the defence; and third, that a scrupulous consideration must be given to all the surrounding circumstances. Clearly the most pertinent factor is the motive and objective for procuring the breach of contract and whether the object to be achieved by the breach warrants excusing the wrongdoing. Attention is also paid to the kind of contract breached; the relationship between the defendant, the contract breaker, and the plaintiff; and the kind of inducement used.

The issue of justification may arise where the defendant directly induces a breach of contract to promote his own interests, the interests of the contract breaker, or the public interest. Justification on the ground of the defendant's self-interest is normally a non-starter unless the defendant is protecting equal and competing contractual or property rights of his own. Imagine, for example, that a vendor sold the same piece of land to A and to B. To protect his contractual rights, A takes steps against the vendor to secure his performance of the contract. This results in the vendor breaking his contract with B. A will not be liable for inducement to breach a contract. [Note 199: Fleming, above note 138 at 764.]

Some old authorities suggest that the defence of justification may be made out where the defendant persuades a person to break a contract that is particularly harsh or immoral or otherwise disadvantageous to the contract breaker. Today, there is much less reason to encourage paternalistic and meddling defendants to induce a breach of contract in the name of altruism for the contracting party. Modern contract law and consumer and labour protection legislation provide contracting parties with generous remedies in respect of agreements that are disadvantageous on the grounds of mistake, misrepresentation, pressure, unconscionability, or public policy. Contracting parties may be given information about available legal remedies but a direct inducement to breach the contract is unlikely to be excused on the ground that it was for the contract breaker's good.

Finally, a defendant may seek to excuse his conduct on the ground that it was in the public interest. Justification in the public interest may be established where the breach of contract has been induced by a regulatory agency or disciplinary body charged with the responsibility for policing the safety or integrity of certain activities such as professional conduct, provided that there were no more reasonable alternatives to achieve their laudable goal. The issue may also arise where a defendant directly induces a breach of contract between a corporation and a customer for political or social reasons such as concern about the corporation's exploitation of Third World labour, its desecration of the environment, or its failure to adopt policies of equality in the workplace. The courts are more reluctant to excuse the wrongdoing on these grounds. There are sufficient legal avenues to promote social and political views, to apply pressure legally, and to publicize one's causes.

Justification is not susceptible of precise or predictable guidelines. The situations in which the issue arises are so diverse and fact-specific that each requires a careful examination of the individual circumstances to determine whether or not the motive, object, and reason for inducing a breach of contract should excuse the defendant.