Inducing Breach of Contract

February 28th, 2020

The issue in Allen v Dodd (2020) EWCA Civ 258 was what amounts to a sufficient state of mind to make a person liable in tort for inducing a breach of contract and causing loss by unlawful means. To be liable for inducing a breach of contract, you must know that you are inducing a breach. Negligence, even gross negligence, is not enough. Mere suspicion is not enough. The touchstone is knowledge.

In order for a person to be liable in tort for inducing a breach of contract, the contract in question must be a binding and enforceable contract. If it were not, then the inducement cannot have caused any loss, which is part of the essence of the tort.

Lewison LJ observed (paragraph 34) that the recent tide of authority has been to restrict rather than to expand the economic torts.

If the defendant honestly believes that the act that he procures will not amount to a  breach of contract, he is not liable in tort, even if his belief is mistaken in law.  It does not matter whether a defendant’s erroneous belief is caused by his own ignorance or by advice, albeit incorrect, that he receives from his lawyers.  If the legal advice is that it is more probable than not that no breach will be committed, that is good enough.

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