Sections 16 and 17 of the Third Restatement set forth more narrow and defined categories of when conduct will create liability. Id. Section 16, relating to interference with contract, provides:
(1) A defendant is subject to liability for interference with contract if:
(a) a valid contract existed between the plaintiff and a third party;
(b) the defendant engaged in wrongful conduct as defined in Subsection (2);
(c) the defendant intended to cause a breach of the plaintiff's contract or disruption of its performance; and
(d) the defendant’s wrongful conduct caused a breach of the contract or disruption of performance.
(2) Conduct is wrongful for purposes of this Section if:
(a) the defendant acted for the purpose of appropriating the benefits of the plaintiff's contract; or
(b) the defendant's conduct constituted an independent and intentional legal wrong; or
(c) the defendant engaged in the conduct for the sole purpose of injuring the plaintiff.
Id. at § 16 (emphasis added). The Third Restatement eschews the term “improper” entirely, using instead the term “wrongful conduct” defined by three narrow instances.
Section 17, relating to interference with economic expectations, goes a step further:
A defendant is subject to liability for interference with economic expectation if:
(a) the plaintiff had a reasonable expectation of an economic benefit from a relationship with a third party;
(b) the defendant committed an independent and intentional legal wrong;
(c) the defendant intended to interfere with the plaintiff's expectation; and
(d) the defendant's wrongful conduct caused the expectation to fail.
Id at § 17 (emphasis added). Thus, “wrongful conduct” can be shown only by an independent and intentional legal wrong committed by the defendant: for example, “conduct wrongful in some way recognized elsewhere by the law.” Id. at § 17, Reporter’s Note (b).
These cases and drafts of the Third Restatement are helpful to focus counsel on the issue of wrongful conduct and the difference between actionable wrongful conduct and tough competition.
- When analyzing whether there is liability for economic hard in interference cases, counsel should focus on the conduct and what types of conduct are considered wrongful.
- Recent cases and the Third Restatement are helpful in defining what conduct will be found to be wrongful, by looking at the conduct and whether the conduct falls within one of the three categories under subsection (2) of § 16.
- The Third Restatement clarifies that interference with contract and interference with economic expectation are two separate and distinct torts, rather than different aspects of the same tort.
- Finally, because the Third Restatement has created much more narrow categories of liability and has clarified what constitutes “wrongful conduct,” it also has discarded several types of “privilege” that were recognized by the Second Restatement. Such privileges are no longer necessary because so much less conduct will be defined as “wrongful.” The Third Restatement sets forth the remaining privileges that can be argued in § 19. For instance, “competition” is no longer a privilege to interfere because competition will only rise to the level of liability for either tort if the competitive conduct meets the narrow definitions of “wrongful.”