Mountain Law: Colorado law may impose liability for interfering with a contract (column) | SummitDaily.com

Mountain Law: Colorado law may impose liability for interfering with a contract (column)

Noah Klug
Mountain Law

Back in the mid-1800s, Johanna Wagner, a renowned opera singer and niece of the composer, was under exclusive contract with Benjamin Lumley to sing opera at Her Majesty's Theatre on the West End. Frederick Gye, who ran the rival Covenant Garden Theatre, induced Wagner to break the contract by promising to pay her more money. Lumley then sued Gye for his damages. Before that time, the law would have allowed Lumley to sue Wagner for breaching their direct contract, but would not have recognized a claim by Lumley against Gye for inducing the breach. However, Lumley, who was trained as a lawyer, convinced the court to allow him to recover his damages based on the theory that a person who knows about a contract between other persons should not interfere with it. This principle has been passed down and is now recognized in Colorado as a tort (legal claim) known as "intentional interference with contractual relations."

Although some cases refer to the claim as "intentionally inducing a breach of contract," Colorado recognizes that mere interference is actionable even if it does not induce a breach. Under this framework, Gye merely offering Wagner more money to perform at his theatre would create potential liability for interference even if Wagner didn't agree to do so.

For a defendant to be liable for the tort in Colorado, there must be a contract and the defendant must have known about it. For instance, if Wagner were merely talking to Lumley about performing at his theatre and Gye tried to persuade her to instead perform at his theatre, Lumley would have no claim against Gye because there would be no contract to interfere with. Likewise, if Gye approached Wagner and offered her a gig not knowing that she was under contract with Lumley, Lumley would also have no claim against Gye. (Of course, if Gye persisted after learning of the contract, that would be a different story.)

If Wagner got a bad case of laryngitis and could not perform, would Lumley still have a claim against Gye? The answer in Colorado is yes, although it might make it more difficult for Lumley to prove damages. The essence of the claim is a duty to not interfere and the law does not excuse improper behavior merely because it fortuitously did not cause harm.

Colorado law requires, however, that the interference must be truly improper. For instance, what if Gye merely put an advertisement in the paper indicating that he was seeking to hire an opera singer for a price that happened to be better than Wagner was getting from Lumley? Absent other facts, the law would recognize that there is nothing improper about such conduct.

What if Wagner had the right to terminate her contract with Lumley at any time? In such circumstances where the contract is "at will," Colorado law may allow it to be interfered with through proper means. This is known as the "business competition privilege." By the same token, there would generally be nothing wrong with Gye advertising that another opera singer performing at his theatre is better than Wagner even though that could arguably interfere with contracts between Lumley and people who have purchased tickets to see Wagner. Competitors can promote their products to a certain extent without facing liability to each other.

Recommended Stories For You

In sum, owing to a fight between rival theatre managers long ago, a person can be liable in Colorado for interfering with a contract between others. Liability ultimately depends on the facts and circumstances of each case.

Noah Klug is owner of The Klug Law Firm, LLC, in Summit County, Colorado. He may be reached at 970-468-4953 or Noah@TheKlugLawFirm.com.