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EXPLAIN THE RECENT DEVELOPMENTS IN JUDICIAL APPROACH IN RESPECT OF TORTS

AFFECTING PERSONS: THE TORTS RELATING TO INTERFERNCE OF CONTACT OR
BUSINESS.
LAW OF TORTS





Submitted by:
AMAN RATHORE
14BBA008
Semester 1





AUGUST 2014




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TABLE OF CONTENTS
TITLE PAGE
NO.
CERTIFICATE 2
ACKNOWLEDGMENT 4
LIST OF CASES
6
ABSTRACT 7
INTRODUCTION
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1.1 NATURE AND DEFINITION TORTS
1.2 SOME DEFINATION OF TORT
2. TORT AND BREACH OF CONTRACT DISTINGUISHED
3. INTERFERNCE OF CONTACT OR BUSINESS
3.1 INDUCING AND BREACH OF CONTRACT
3.2 CONSPIRACY
3.4 MISREPRESENTATION
3.4.1. TYPE OF MISREPRESENTATION

CONCLUSION
14
BIBLIOGRAPHY
Statutes
Books
Websites
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ACKNOWLEDGEMENT

I have endeavored to attempt this project. However, it would not have been feasible without the
valuable support and guidance of Dr.B.Hydervali. I would like to extend my sincere thanks to him.
I am also highly indebted to the library staff of the National Law University, Odisha, for their patient
co-operation as well as for providing necessary information & also for their support in completing this
project.
My thanks and appreciations also go to my classmates who gave their valuable insight and help in
developing this project.













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TABLE OF CASES

1. Birmelow V. Casson 9
2. Candler V. Crane, Christmas and Corp 13
3. Cann v. Wilson 12
4. Crofter Hand Woven Harris Tweed Co. Ltd. V. Veitch 11
5. D.C. Thomson & Co. Ltd v. Deakin 8
6. Derry v. Peek 12
7. Donoghue v. Stevenson 13
8. Dr. Francesco V. Barnum 9
9. G.W.K. Ltd. V. Dunlop Rubber Co. Ltd 8
10. Genu Ganpati v. Bhalachand Jiraj 9
11. Headley Byrne and Co. Ltd. V. Heather and partner 13
12. Hunteley V. Thorton 11
13. Joe Lee Ltd. V. Dalmeny 9
14. Leliebre V. Gould 12
15. Lumley V. Gye 7
16. Mogul Steamship Co. v. Mcgregor, Gow and Co. 9
17. Quinn v. Leathem 11
18. Sorrel V. Smith 10







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Critical examination of the torts interfering with Contract or Business
ABSTRACT

The following projects elaborate upon the torts that deal with interference of contract or business.
Firstly, the projects give a definition of Torts and the basic essential of it. Then in distinguished
between the tort and breach of duty after the basic terms are clear then the project deals with the torts
like inducement of Contract and how it is considered as a tort and by how inducement is done. Tort
dealing with conspiracy and how law to tort help to claim against them. The concept of
misrepresentation is also elaborated. Forms of misrepresentation alike innocent misrepresentation,
negligent misrepresentation and fraudulent misrepresentations are also explained. These all concept
are explained through various cases.












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1. INTRODUCTION
The project deals with the torts that are related to interference with contract or business. To understand
the topic we must know the very meaning of tort and what role it plays in the contract or business
1.1 NATURE AND DEFINITION TORTS
Derived from a Latin word tortum it includes that conduct which is not straight or lawful, but, on the
other hand, twisted, crooked or unlawful. The law imposes a duty to respect the legal right vested in the
members of the society and the person making a breach of that duty is said to have done the wrongful
act. As crime is a wrongful ac, which results from the breach of duty recognized by criminal law, a
breach of contract is the non-performance of a duty undertaken by a party to a contract; similarly,
tort is a breach of duty recognized under the law of torts.
1.2 SOME DEFINATION OF TORT
Some of the important definition, which indicates the nature of this branch of law, is as under:
1. Tort means a civil wrong which is not exclusively, a breach of contract or breach of trust-S.
2(m), the Limitation Act, 1963
2. it is a civil wrong for which, he remedy is a common law action for unliquidated damages and
which is not exclusively a breach of contract or breach of trust or other merely equitable
obligation- Salmond.
3. It is an infringement of a right in remof a private individual giving a right of compensation at
the suit of the injured party.- Fraser.

We may define tort as a civil wrong which is redressible by an action for unliquidated damages and
which is other than a mere breach of contract or breach of trust.

After understanding the concept of tort for the purpose of this project one must understand the concept
of contracts as well.
In a general view Contract law is that body of rules that govern contractual agreements between
persons or merchants. A contract is basically an agreement between parties outlining their duties and
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responsibilities to one another. Contracts can be formed for nearly any type of interaction that could
be verbal or written.

2. TORT AND BREACH OF CONTRACT DISTINGUISHED

Since the projects deals with the torts concerning to contract on must be through with the concept of
breach of contract as well.

Meaning of breach of contract.
A breach of contract results from a breach of duty undertaken by the parties themselves. The
agreement, the violation of which is known as a breach of contract is made by the parties with their free
consent.

Difference between tort and a breach of contract.
Above gave the meaning of breach of contract. Tort on the other hand, results by the breach of duties
that are not undertaken by the parties but are imposed by the law. For example, I have a duty not to
assault or defame anyone or to commit trespass to a person or to a property no because I have
voluntarily undertaken the duties but these are imposed on us by law. On the other hand, if I have
undertaken a contract to supply you with radio set and I fail to do so then I fail to perform an obligation
which I have voluntarily undertake, it is breach of contract.

3. INTERFERNCE OF CONTACT OR BUSINESS

3.1 Inducing the Breach of Contract
It is tortious to knowingly and without lawful justification induces one person to make a breach of a
subsisting contract with another as result of which that other person suffers damage. This is the essence
of the decision in Lumley v. Gye
1
. Earlier a master could bring an action against one who is wrongfully
deprived him of the services of his servant but the rule did not apply to other contract. Lumley v. Gye
marked a turning point and inducement to make a breach of contract was recognized as an independent
tort. In that case, Johanna Wagner, a famous singer, was under a contract with the plaintiff to sing for
the plaintiff. The defendant paid a large amount to induce her to break her contract with the plaintiff

1
(1853) 2 E & B. 216:95 R.R 501
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and to sing for the defendant. The defendant was held liable.


The tort may be committed in various ways:
i) By direct inducement
the defendant must do the same either by offering some temptation, to one of the parties to make a
breach of his contract, for example, by offering higher remuneration to a servant than he is already
receiving under a subsisting contract or by giving some threat of harm if the contract is kept, alive.
Mere advice is not actionable. If a person breaks his contract of service because of medical advice, or a
girl breaks her marriage on advice of her parents then no action can be brought against the doctor or the
parents for inducing breach of contract, it is, however, possible that the person making a breach of
contract of service or of marriage may himself be liable for the breach of contract.
ii) By doing some act which renders the performance physically impossible- examples of it are,
physically detaining one of the parties to the contract. Ref D.C. Thomson & Co. Ltd v. Deakin
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removing the tools that is necessary to perform the contract, with a view to preventing the performance
of the contract.
iii) Knowingly doing an act which if done by one of the parties to the contract, would result in breach of
the contract. The case of G.W.K. Ltd. V. Dunlop Rubber Co. Ltd
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is a good illustration of this kind of
interference the company was a car manufacturing company which had entered into a contract with A.
Co. that all the cars manufactured by the former were to be fitted by tires manufactured by latter
whenever the cars were sent to exhibition. When the cars were sent to an exhibition, Dunlop Rubber
Co. knowing about the above stated contract, secretly removed such tires from two of the cars and
replaced them with the tires of their own manufacture. The defendants (Dunlop Rubber Co.) were held
liable toward A. Co. for interference with the contract and towards plaintiff to trespass to the good.

The rule that inducement of breach of contract is a tort is subject to following qualification: -
1. Inducing the breach of subsisting contract is a tort, there is no wrong to persuade a person to refrain
from entering into a contract. It is also no tort to persuade a person to refrain from terminating an
existing contract lawfully. The authority for the proposition is the leading case of Allen v. Flood
4
.
There the plaintiff who were shipwright, were employed by the ship owners to make repairs of wood
work on the ship. Their services were terminable at will. Due to some grievances some iron workers

2
(1952) 1 Ch. 646, at 678
3
Id at 702
4
(1898) A.C. 1.
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objected to the plaintiff employment. There and through their representative, the defendant, they
conveyed to the ship owners warning that unless the plaintiff were discharged, they would go on strike.
The plaintiffs were dismissed the very day. Since the services of the plaintiff were terminable lawfully
the House of Lords held that howsoever malicious motive the defendant may be having the plaintiff
had no cause of action.
The decision in Genu Ganpati v. Bhalachand Jiraj
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, also explains this point.
2. Inducing breach of such agreement which is null and void is not actionable. Thus, no action lies to
induce the breach of a wagering agreement.
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Or infants agreement which is oppressive and
unreasonable
7
.
3. An action lies when inducement to make a breach of contract is without any justification. Inducing
the breach with a justification is a good defense. Thus, in Birmelow V. Casson,
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it was held that the
members of the action protection society were justified in inducing a theatre manager to break his
contract with a plaintiff, who paid his chorus girls such low wages that they were forced to resort to
prostitution. A father is also justified in persuading his daughter to make a breach of contract of
marriage with a scoundrel.
4. A statutory exception to the rule has been created by English (i) Trade Disputes Act, 1906.
According to Sec. 3 of the Act.
An act done by a person in contemplation or furtherance of a trade dispute shall not be actionable on
the ground only that it induces some other person to break a contract of employment or that is in
interference with a trade, business or employment of some other person or with a right of some other
person to dispose of his capital or labor as his wills.

A similar provision has been made by the Sec. 18(1), The Indian Trade Union Act, 1926, which says
no suit or other legal proceeding shall be maintainable against any registered trade union or any
officer or member thereof in respect of any act done in contemplation of furtherance of a trade dispute
to which a member of the trade union is a party on the ground only that such induces some other person
to break a contact of employment, or that it is an interference with a trade, business or employment of
some other person or with right of some other person.




5
A.I.R. 1981 Bom, 170
6
Joe Lee Ltd. V. Dalmeny (1927) 1 Ch. 3000
7
Dr. Francesco V. Barnum (1890)
8
(1924) 1 Ch 302
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3.2 CONSPIRACY
When two or more person without lawful justification, combine for the purpose of willfully causing
damage to the plaintiff, and actual damage results there from, they commit the tort on conspiracy
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.
Conspiracy is both a tort and a crime. Criminal conspiracy is different from conspiracy as tort. Under
criminal law merely an agreement between the party to do an illegal or a legal l act by illegal mean is
actionable. It is not necessary that the conspirators have acted in pursuance of their agreement. The
tort of conspiracy is however, not committed by a mere agreement between the parties, the tort is
completed only when the actual damage results to the plaintiff.
When the object of persons combining is to protect or further their own interest rather than causing
damage to the plaintiff, that is a justification for their combination and they will not be liable even
though their concerted act causes damage to the plaintiff. In Mogul Steamship Co. v. Mcgregor, Gow
and Co.
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, the defendants, the certain firms of ship-owners, who had been carrying trade between
China and Europe, combined together and offered reduced fright with a view to monopolize the trade
and the result was that the plaintiff, a rival trader, was driven out of the trade. The plaintiff brought an
action for conspiracy. The House of Lords held that the defendant were not liable for that because their
object was a lawful one, that is, to protect and promote their own business interest and they had used no
unlawful means in achieving the same.
Similar was the decision in Sorrel v. Smith
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. The plaintiff a retail news agent who was accustomed to
take his newspapers from R, withdrew his custom from R and stated taking the newspaper from W.
The defendant, the members a committee a circulation manager LONDON DAILY NEWSPAPAR.,
threatened the cutting off the supply on newspaper to W, if W continued to supply newspaper to the
plaintiff. Since, the defendants had acted to promote their business interest, they were held not liable.
The following two propositions were laid down.
1. A combination of two or more person willfully to injure a man in his trade is an unlawful act and, if it
results in damage to him it is actionable.

9
Crofter Hand Woven Harris Tweed Co. V. Veitch (1942) A.C. 435, 439
10
(1892) A.C. 25
11
(1925) A.C. 700
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2. If the real purpose of the combination is not to injure another, but to put 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
ensue.
The distinction between two classes of cases is sometime expressed by saying that in cases of the
former class there is not, while in cases of the latter class there is, just cause or excuse of the action
taken.
Crofter Hand Woven Harris Tweed Co. Ltd. V. Veitch
12
is another illustration of a combination of a
lawful purpose. There, the defendant, a trade union, instructed Dockers who were members of the
union to refuse to handle the plaintiffs good (without there being any breach of contract). The object of
this embargo was to prevent competition in the yarn trade and thus help to secure economic stability of
the industry and thereby increase the wage prospect of the union member in the mill. It was held that
since the above action by the union was to promote the interest of its member there was no conspiracy.
If the purpose of the association is to injure the plaintiff rather than the promotion of the legitimate
interest, an action lies. In Hunteley V. Thorton
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the plaintiff, members of the union refuse to comply
with the union call for strikec. The defendants, secretary and some members of the union, wanted the
expulsion of the plaintiff from the union, but the executive council of the union decided not to do that.
The defendant acting out of grudge against the plaintiff made efforts to see that the plaintiff remained
out of work the defendant were liable as there acts, after the decision of the union executive council
were not in furtherance of any union interest but were actuate by malice and grudge.
In Quinn v. Leathem
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also, there was found to be malicious motive on the part of the defendant, certain
trade union officials. The plaintiff was a wholesale butcher and the defendant objected to his employing
the non-union labor. The defendant requested the plaintiff to replace the non-union labor with the
member of the union but the plaintiff refused to do that. Then the defendant approached one of the
plaintiffs regular and big customers with the threat to use of force against him if he continued to
purchase meat from the plaintiff. The customer stopped taking the meat from the plaintiff, who suffered
loss thereby. The plaintiff was held entitle to claim compensation from the defendants.



12
(1942) A.C. 435
13
(1957) 1 W.L.R. 321; (1957) AII E.R. 234
14
1907 A.C. 495
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3.4 MISREPRESENTATION
A misrepresentation is a false statement of fact made by one party to another which, whilst not being a
term a contract, induces the other part to enter the contract. The effect of an actionable
misrepresentation is to make the contract voidable, giving the innocent party the right to rescind the
contract and/or claim damages.

3.4.1. TYPE OF MISREPRESENTATION
I. NEGLIGENT MISEREPRESENTATION
When the defendant has deliberately made a false statement and caused loss to the plaintiff, who relied
and acted on the statement, the defendant would be liable. The question now to be considered is, as to
how far the defendant would be liable for a statement honestly but negligently made by him, when such
a statement causes some harm to the plaintiff.
In
II. Cann v. Wilson
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, an action for negligent misstatement was recognized and damages awarded. There,
the defendants, who were evaluators of property at that time, over valid certain property at that time
they knew that the property was being valued for the purpose of mortgage. On the strength of valuation
the plaintiff granted loan to the owner of certain property. When the owners of the property defaulted in
the repayment, the plaintiff found that the true value of property was not sufficient to satisfy the
mortgage debt. He wanted to recover the loss from the defendant. The defendants were held liable
because in these circumstances, they incurred a duty towards the plaintiff to use reasonable care in the
preparation of document.
In Derry v. Pee
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k, the House of Lords decided that there could be no liability for deceit in respect of a
negligent statement; it could be there only for a dishonest statement. This decision was subsequently
understood to mean that there could be no liability at all for a mere negligent misstatement; for the
purpose of liability, the statement must be deceitful. It is because of such interpretation in Leliebre V.
Gould
17
, the decision in Cann v. Wilson, was considered to be inconsistent with Derry V. Peek, and
deemed to be overruled thereby.
In Leliebre V. Gould, the plaintiff gives some loan the mortgage of certain property on a basis of a

15
(1888) 39 Ch D. 39
16
(1889) 14 A.C. 337
17
(1893) 1 Q.B. 491
13

certificate given by the defendant, Gould. Gould who was the surveyor, had given this certificate to the
builder of the property, who had employed him. The plaintiff sued the defendant, Gould on the basis of
false certificate issued by him. It was held that there could be no action from mere negligence. An
action could sustain only if there was fraud. It was also observed that according to the decision in
Derry V. Peek, in the absence of the contract an action for negligence cannot be maintain when there is
no fraud.

Liability for negligence was explained in Donoghue v. Stevenson, by the House of Lords after this
decision, it was argued in some cases that now the position had changed and there would be as much
liability for negligent words as for negligent deeds. This plea was rejected, and it was held that the
position remained the same. In spite of the decision in Donoghue V. Stevenson. In Candler V. Crane,
Christmas and Corp. It was stated that the ginger beer bottle case stated that duty of care only with
respect off dangerous chattels and that duty did not govern cases of negligent misstatement. Different
rule still apply to the negligent statement and negligent circulation or repair of chattels; Donoghue case
does not seem to have abolished such differences. It was also stated that false statement which were
made carelessly (rather than fraudulently by one person and acted upon by other to his disadvantage
could not be actionable unless there was a contractual or fiduciary relationship between both the
parties.
In Headley Byrne and Co. Ltd. V. Heather and partner
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, the facts are as follow: the plaintiff, who were
advertising had been instructed by their customer, Easi Power Ltd., to obtain substantial advertising
contract for the latter. They were anxious to know the worthiness of Easi Power Ltd.; they requested
their own bankers to ascertain the financial position of easy power from the defendant, who were Easi
Powers bankers. On enquiry whether Easi Power were trust worth to the extent of 1, 00,000 pound per
year. The defendant replied that the Easi Power were a respectably constituted company, considered
good for its ordinary business engagement. The letter also stated for your private use and without
responsibility from the part of this bank or its official. The plaintiff, replying on these statements went
ahead with the contract made on behalf of Easi Power. The Co. went in liquidation and the plaintiff
suffered a loss of over 17,000 pound which they had spent on the order. The plaintiff sued the
defendant contending that the negligent misstatement made in this case amounted to a breach of duty.
Held, the defendants were not liable because they had been made protected themselves by stating that
the statement had been made without responsibility from the part of this bank or its official.

18
(1964) A.C. 495, (1963) 2 A.E.R 575
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The House of Lords clearly held that there was a duty to take care in making the statement and there
would be a breach of duty if the same were done negligently.

III. INNOCENT MISREPSENTATION
When a person makes a false statement but there is neither an intention to deceived nor any negligence
in making the statement, there is no liability for such statement under law of tort because in such a case
an action cannot lie either for fraud nor for negligent misrepresentation. In England, the
Misreprestation Act, 1967, however, permits the award of compensation for such innocent false
statement. The compensations under the Act are awarded when there is misrepresentation and parties
make a contract on that basis. That stipulates the right to claim compensation in case of non-fraudulent
misrepresentation in the same way as would have been there if there had been fraud...


IV. FRADULENT MISREPSENTATION
Lord Herschell defined fraudulent misrepresentation in Derry v Peek as a statement which is
made either:
i) knowing it to be false
ii) without belief in its truth, or
iii) recklessly, careless as to whether it is true or false.
The burden of proof lies on the claimant.

CONCLUSION

From the project, one will understand the basic difference between tort and breach of contact. After this
distinction it is easy to understand how torts can apply in contract as well that is its interference with
contact or business. The very purpose to this project is to explain the various torts that are concerned
with contract, like inducement of contract where a person induces other person to breach his/her
contract. Tort for conspiracy explain how a person for his own intention breaches another contract, and
then the projects also explains the concept of misrepresentation in and its various type which are
negligent misrepresentation, innocent misrepresentation and fraudulent misrepresentation where it has
been explained how a statement can be put up in various form and how a claim under tort can be made.

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BIBLIOGRAPHY
1. Statues
Sec. 18(1), The Indian Trade Union Act, 1926
2. Books
Ratan Lal & Dhiraj Lal
R.K Bangia
3. Website
indiakanoon.org
westlawindia.com