TORTS AFFECTING CONTRACTUAL AND

BUSINESS RELATIONS
• Name : SYEDA EMAAN FATIMA
• Roll No : 22108001-055
• Semester : 3rd
• Section : Grey
• Presented To : Ma’am Saqiba
 TORTS AFFECTING CONTRACTUAL AND
BUSINESS RELATIONS
Torts affecting contractual and business relations are two:-
I. Procuring breach of contract
II. Conspiracy.
 I. PROCURING BREACH OF
CONTRACT
• It is an actionable wrong to induce a person to commit a breach of a
contract which he has entered into with another person: for, "it is a
violation of a legal right to interfere with contractual relations
recognized by law, if there be no sufficient justification for the
interference."
 INGREDIENTS:
In an action for this tort the plaintiff must prove:-
• That there was a valid and subsisting contract between himself and a third
party, and
• That the defendant procured a breach thereof knowingly and unjustifiably.
• In a case it was held that a theatrical manager was entitled to recover damages in an action of tort
for the act of another theatrical manager in inducing a certain Miss W, to break her contract to act
at the plaintiff's theatre for three months. The rule is not confined to contracts of personal service
only but is applicable to contracts of all kinds. (Lumley v. Gye].
• "It must also be noted in this connection that procuring a breach of contract is actionable; but no
action lies for procuring another to refuse a contract with the plaintiff, even if it be done
maliciously, provided that wrongful means are not used. Such an action is damnum sine injuria,
though it may interfere with the plaintiff's trade or business. Moreover, though inducing a breach
of contract is an actionable tort, no action will lie for the inducement of a contract which is null
and void, i.e., a wagering contract.
• Problem.-A contracts to purchase from B 100 bales of cotton for future delivery,
but also arranges to give or to receive only the difference in price according to the
rise and fall of the market. C induces A to break the contract. Is C liable in tort?

Solution.-C is not liable in torts. [Joe Lee.Ltd. v. Lor Dalmeny].

 II. CONSPIRACY
• A conspiracy is an unlawful combination of two more persons to do that
which is contrary to law, or to do that which wrongful and harmful
towards another person, or to carry out an object n in itself unlawful by
unlawful means.
 INGREDIENTS:
There must be
• some act in pursuance of the conspiracy; and
• actual damage to the plaintiff. It is the damage wrongfully don and
not the conspiracy, that is the gist of action.
PROBLEM: THE PLAINTIFF WAS A BUTCHER EMPLOYING NON-UNION MER THE
DEFENDANTS WHO WERE OFFICIALS OF THE UNION DEMANDED THE DISMISSAL O
THE MEN, AND ON THE PLAINTIFF'S REFUSAL THEY FORCED ONE OF HIS BEST
CUSTOMER TO STOP TAKING SUPPLIES FROM HIM BY THREATS TO WITHDRAW
UNION MEN FROM THE CUSTOMER. DISCUSS.

• Solution: Defendants were liable to the plaintiff for the damage incurred, [Queen v. Leathem].

No action for a conspiracy however lies against persons who act in concert to damage another and do damage
him, but who at the same time merely exercise their own rights by lawful means and who infringe no rights of
other people, e.g., an act done for the purpose of protecting and extending trade. But a combination not in
pursuit of trade interests, but in pursuit merely of malicious purpose to injure another would be clearly unlawful,
and if an injury has resulted an action lies.
PROBLEM: DEFENDANTS, A UNION OF NEWSPAPER OWNERS, THREATENED TO CUT
OF SUPPLY OF PAPERS TO A, A WHOLESALER, IF HE CONTINUED TO SUPPLY TO THE
PLAINTIFF, A RETAILER, WHO HAD TRANSFERRED HIS CUSTOMERS FROM B TO A AT
THE INSTIGATION OF HIS OWN ASSOCIATION OF RETAIL AGENTS IN PURSUANCE OF
THEIR POLICY. DISCUSS.

• Solution:
It was a case of conflicting trade interest of two associations and the plaintiff had no cause of action.
The defendants acted solely to protect their trade, and not from spite or desire to injure the plaintiff.
They had acted only with a view to advance their own interest and had not committed or threatened
to commit any wrong against the plaintiff.[Sorrel v. Smith].
 CONTINUE:
Soller v. Smith lays down two principles.
I. A combination of two or more persons willfully to injure a man in his trade is unlawful and, it it results in
damage to him, is actionable.
II. If the real purpose of the combination is not to injure another but to forward or defend the trade of those who
enter into it, then no wrong is committed and no action will lie, although damage to another ensues, provided
that the purpose is not effected by unlawful means such as violence or threat of violence or fraud. The
distinction between the classes of cases is that in cases of the former class, there is just cause or excuse for the
action taken.
Transferred loss, principle of, scope.-General principle was that a claimant in action for breach of contract could not
recover damages in respect of loss caused by the breach to some third person not party to the contract. Exception to
the said principle was where it was in the contemplation of the parties when the contract was made that the property.
the subject of the contract and the breach, would be transferred to or occupied by a third party, who would in
consequence suffer the loss arising from its breach. In such a situation, the claimant was seen as suing on behalf of
and for the benefit of the injured third party and was bound to account accordingly.
 CONTINUE
Illustration
• 'A' and 'B' relating to A's property which was subsequently acquired by 'C'. Said principle enabled 'A' to
recover damages for B's breach of contract which injured the property, even though the loss flowing from that
injury was suffered by 'C' and not by 'A'. Circumstances in which the principle of transferred loss could apply
were where, firstly at the time of making the contract with 'A', 'B' would reasonably have anticipated that 'A'
would transfer the property to a person such as 'C' and that that person would suffer loss if 'B' breached the
contract, so that the contract could be seen as having been entered into by 'B' partly for C's benefit; and,
secondly, there was nothing in the contract or the surrounding circumstances which negated the conclusion
that the principle should apply. Principle of transferred loss was an anomalous principle bearing in mind the
well- established conventional rules relating to recovery of damages for breach of contract, namely that,
subject to the terms of the contract, scope of duty. foreseeability and mitigation, 'A' could only recover
damages in respect of loss which 'A' suffered as a result of B's breach of contract. For such reason the
principle of transferred loss should only apply in defined and limited circumstances.
• Exception to the principle of "transferred loss". Principle of transferred loss was a limited exception to the general
rule that a claimant could recover only loss which he had himself suffered. Said exception applied where the known object of
a transaction was to benefit a third party or a class of persons to which a third party belonged, and the anticipated effect of a
breach of duty would be to cause loss to that third party. Principle of transferred loss was driven by legal necessity, therefore
it was an essential feature of the principle that the recognition of a right in the contracting party to recover the third party's
loss should be necessary to give effect to the object of the transaction and to avoid a "legal black hole", in which in the
anticipated course of events the only party entitled to recover would be different from the only party which could be treated
as suffering loss. Principle of transferred loss would not apply if the third party had a direct right of action for the same loss,
on whatever basis.

• Res inter alios acta, doctrine of, scope.-General rule was that loss which had been avoided was not recoverable as damages,
although expense reasonably incurred in avoiding it may be recoverable as costs of mitigation. Exception to such general
rule was collateral payments (res inter alios acta), which the law treated as not making good the claimant's loss. Critical
factor was not the source of the benefit in a third party but its character. Collateral benefits were those whose receipt arose
independently of the circumstances giving rise to the loss, thus a gift received by the claimant, even if occasioned by his loss,
was regarded as independent of the loss because its gratuitous character meant that there was no causal relationship between
them. Same was true of a benefit received by right from a third party in respect of the loss, but for which the claimant had
given a consideration independent of the legal relationship with the defendant from which the loss arose.