October 2009 Archives

No Act of G-d in Failing to Maintain Sewer

October 25, 2009

Claimant sought $5,000 from the City of New York for flooding in her home. The City claimed that it was not negligent in maintaining the sewer system, and that no matter what the cause, because of the torrential rain, any flooding was an act of G-d, excusing any misconduct by the City. The court found the City liable because it performed no inspection even though the City, as a municipality, had an obligation to periodically inspect the sewer and keep it clear from obstruction.

Competition and Existing Contracts

October 9, 2009

In the normal course of events, two parties that enter into a contract are obligated to perform in accordance with that contract. Where a party fails to do so that party has breached the contract and will ordinarily be liable for any resulting damage to the other, non-breaching party. Although in most cases only the breaching party can be liable, there are limited scenarios where others may be liable as well. This article will discuss situations where a third- party that is not a party to the breached contract can also be liable to the non-breaching party. This third-party's liability is based on its improper interference with an existing contract, known as tortious interference with an existing contract.

Before discussing the details of this claim and liability, it is important to understand that courts will generally sanction and encourage legitimate business competition. Courts will not penalize a third-party's ordinary attempts to solicit business, even when doing so may result in the breach of a contract between two other parties. Therefore, the fact that a party to a contract breached that contract to respond to the solicitations of a third- party, does not automatically create liability for that third-party. As discussed below, the conduct of the third-party in soliciting the business often determines whether its conduct was proper.

For example, Tire Supply, Inc., has an exclusive contract to sell tires to Tire Depot, Inc., for $10 a tire. The agreement provides that Tire Supply may sell to no one other than Tire Depot and Tire Depot may purchase tires only from Tire Supply. Tire Meddler Corp., approaches Tire Supply and offers to buy all of its tires for $12 a tire, $2 more than Tire Supply receives from Tire Depot. Selling to Tire Meddler will require that Tire Supply breach and terminate its agreement with Tire Depot. Assuming that Tire Supply agrees to sell to Tire Meddler, and breaches its contract with Tire Depot, and is sued by Tire Depot for that breach, can Tire Depot sue Tire Meddler for causing Tire Supply to breach their agreement? Has Tire Meddler done anything legally wrong considering that from a strict business point of view, Tire Meddler did nothing more than offer Tire Supply a better deal?

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