Tim Horton’s was a franchisor and had a franchise agreement, or contract, with Donut King, a franchisee, which ran 12 Tim Horton franchises in Ontario. A male employee of Donut King was apparently sexually harassing female employees of Donut King which was contrary to Tim Horton’s workplace harassment policy with Donut King set out in the franchise agreement. This led to the termination of the franchise agreement between Tim Horton’s and Donut King. Tim Horton’s then sued the Donut King employee, among other defendants, alleging that the employee had interfered with Tim Horton’s economic relations with Donut King by inducing the breach of contract. The basis of this lawsuit is the tort (“the wrong”) of intentional interference with contractual relations. Tim Horton’s had to prove five things against the employee: (1) knowledge of the contract, (2) an intention to bring about a breach of the contract, (3) conduct which results in the breach, (4) damage to Tim Horton’s, such as loss of profit, and (5) the lack of anything that might justify what the defendant did. Fortunately for the employee, the court did not think that he intended to bring about a breach of the franchise agreement and he was let out of the lawsuit.
Other scenarios may bring a different result. A high-powered insurance agent has a binding contract with his broker and makes a lot of money for the broker. The competing broker in town offers this agent a better deal and the agent moves over to the competing broker. Has the competing broker interfered with economic relations?
The position of professionals is another matter. For example, a lawyer may advise a client that it is a good idea to breach his employment contract because the company is in financial trouble. A doctor may recommend to a patient that he should leave his job because it is too stressful. Neither professional will be exposed to the scourge of litigation for performing their professional duties. Even the president of a company is protected from an allegation of contractual interference when he or she decides in good faith that it is not in the best interests of the company to perform a contract.