South-Western Legal Studies in Business

Getting Supplier to Stop Possible Deal with Outside Company Not Tort of Interference
Description

New York court dismissed a complaint for tort of interference with prospective advantage by a company that was told by another company that it could not do business with them as it may lose an account with another company if it did. Relations were broken to benefit the company that was negotiating, not the outside company.

Topic Torts
Key Words

Interference with Prospective Business Advantage

C A S E   S U M M A R Y
Facts

Sirius operates a satellite radio service and makes receivers for its transmissions. It authorizes some third parties to make and sell receivers under the Sirius brand name. The company KRI is the largest maker of its receivers. Sirius is KRIís largest revenue source. The receivers made by its competitor XM are not compatible. AGT makes receivers for XM. AGT began discussions about having KRI develop a HD (high definition) radio receiver. KRI broke off discussions and told AGT that Sirius was not happy about KRI working with AGT. AGT then sued Sirius for interference with a prospective business advantage. AGT claims that it would have earned profits from a relationship with KRI that would get AGT into the HD radio market.

Decision

Complaint dismissed. To show a tort, AGT must show 1) a business relation with a third party (KRI), 2) interference with those business relations by Sirius, 3) that Sirius was acting with the sole purpose of harming AGT, and 4) caused injury to a business relation. Sirius did not tortiously interfere with prospective advantage when it prevailed on KRI to break off negotiations to manufacture HD receivers. KRI was motivated by economic self-interest. There is no evidence that Sirius was acting maliciously toward AGT. There was nothing improper in the actions taken by Sirius.

Citation

Advanced Global Technology v. Sirius Satellite Radio, ---N.Y.S.2d--- (2007 WL 764710, Sup. Ct., N.Y., 2007)

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