SW Legal studies in Business

Punitive Damages Possible for Tort of Interference with a Contract
Description

Oklahoma high court held that if a party to a contract recklessly or intentionally committed the tort of interference to the contract, thereby preventing the other party to the contract from fulfilling it, punitive damages could be imposed.

Topic Torts
Key Words

Interference with Contract; Punitive Damages

C A S E   S U M M A R Y
Facts

Wilspec and DunAn both design, manufacture, and sell parts for air conditioning units. Wilspec entered into a three year contract with Zhejiang DunAn to make certain parts for distribution in North America. The parts would be under the Wilspec name, and the company would be the exclusive seller in North America. Wilspec claims that during the contract, DunAn intentionally interfered with Wilspec’s contractual relations with customers by directly selling to existing and potential customers, by changing the terms of the contract price, by refusing to ship parts, by failing to maintain quality standards, by delivering defective parts, and by disparaging Wilspec to customers. As a result of the problems, Wilspec claims it was unable to fulfill customers’ needs and lost customers. It sued for actual and punitive damages for intentional interference with contractual relations. The federal district court certified questions to the Oklahoma supreme court about the status of such tort law in Oklahoma and if punitive damages could apply.

Decision

Questions answered. Oklahoma follows the Restatement (Second) of Torts on this matter. One who intentionally and improperly interferes with performance of a contract between another and a third person, by preventing the other from performing the contract or causing performance to be more expensive or burdensome, is subject to liability to the other party for his loss. Punitive damages cannot be recovered only for breach of contract obligations. Punitive damages can be awarded for tortious interference with a contract if the plaintiff can show that the defendant acted recklessly, intentionally, or maliciously.

Citation

Wilspec Technologies v. DunAn Holding Group, ---P.3d--- (2009 WL 349704, Sup. Ct., Ok., 2009)

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