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Intentional Economic Torts Notes

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Sumption & Lloyd Jones JSC BTA Bank v Krapunov 18 recognise that econ torts are major exception to rule that no duty in tort avoid causing econ loss

rule exists to allow competitive business - law must be careful when identifying point where such conduct
'transgresses legitimate bounds' - a task of 'exceptional delicacy'

Nev er been that prominent & not unified - eclipsed by 'upstart cousin' (O'Sullivan) Hedley Byrne

but recent resurgence - new role in resolving boundaries of commercial ethics

origi ns in old-fashioned labour law


2 torts:
Inte ntionally inducing/procuring breach of contract - Lumley v Gye

ope ra singer induced to breach contract with L to sing at G theatre instead ii)
Inte ntionally causing loss by unlawful means - Allen v Flood

unio n officials said iron workers would stop working if ship-rites re-engaged - ER bowed to pressure so stopped work

no tort committed - no contract breached & no unlawful means - emphasised doing something with bad motive not a tort - no doctrine of rights etc

origi ns = Tarleton v M'Gawley 1790 captain of ship fired canon at another boat every time tried go to shore to trade - unlawful! (intimidation)

Duri ng 20C confusion coz courts tried unify the 2 as a single 'innominate tort' - muddled their requirements & expanded remit

relie d on circular reasoning to treat Lumley as involving unlawful means - only unlawful coz inducing breach!

Lum ley extended to cover 'interference' with contract

Middlebrook Mushrooms v TGWU protest urging consumers not buy M products by TU - no breach/
unlawfulness - overturned by CA

also expanded liability from 'intention' to include mere 'foreseeability' - too far
Page 1 of 18 •

Millar v Bassey - B pulled out of record deal causing co. break contracts with musos - they sued her
& won in CA! Obvs she didn't intend cause them loss/breach etc

Wei r was v critical - upsetting doctrine of privity etc

Rem ember, Eng has no doctrine of abuse of rights - contrast US decision (Tuttle v Buck) - there banker opened barbershop with aim of bankrupting the owner - held tortious - wouldn't be in England!

OBG v Allan 07 HL clarified & uncoupled the 2 torts - 3 conjoined appeals

: Ds appointed receivers of a floating charge which turned out be invalid - but in gf took control of C's assets - argued unlawful means - no - nothing unlawful & no breach contract

Mai nstream Properties v Young: EEs (in breach of employ contract) diverted business opportunity to a co. they ran - D financed transaction - said he didn't believe would = breach - argued inducing breach
- HL said no coz no intention procure breach (+ no UM) - overruled Millar!

Not e also relevant they approached him & not other way round

Dou glas v Hello no.3: OK mag exclusive contract for D & Zeta Jones wedding - Hello published pics surreptitiously taken - argued unlawful means but said wasn't - not much discussion i)


Ele ments (largely) clarified by OBG but older cases also useful - HL confirmed is tort of secondary liability

Tho mas v Deakin said requirements = direct persuasion/procurement/inducement applied by TP to contract-breaker, with knowledge of contract & intention of bringing about its breach


Ind ucement/Procurement

• orthodox view = direct persuasion - where indirect -> unlawful means

• Lord Hoffman OBG suggested test = did D's acts of encouragement/threat/persuasion have sufficient causal link with breach to attract accessory liability?

• seems broader - may cause confusion - Carty

• Weir considered 'persuasion' key - seems be what court in OBG thought too mere interference no!

• court rejected indirect intervention & prevention of performance (there look at

• Mere advice insufficient - Lewis v Yeeles

• can be difficult line draw - Neil LJ in Mushrooms noted could infringe Art 10 if go too far

• Hart & Honoré say inducement about making a given course of action more desirable in eyes of another than otherwise would've been
Page 2 of 18 • Mummery LJ in Lewis v Yeeles CA said about persuading/causing act in a way otherwise wouldn't have done

• The 'inconsistent transaction fallacy'/facilitating breach = suggested enough by Jenkins LJ in Thomson v Deakin

• took support from BMTA v Salvadori - D bought car from C's co-contractor knowing this breached obligation not to sell within year - held liable - mere inconsistency/facilitation

• approved in Rickless v United Artists

• applied in Lictor Anstalt v Mir Steel 11 - judge thought arguable - declined strike out

• under contract A not allowed sell L property, went bust & sold to M

• note GWK & ARM v Dunlop Rubber 26 D put their tyres on GWK car placed them passively in breach with ARM - held liable - criticised in OBG Hoffman said no active procurement, suggested UM instead

• comes from 'interference' confusion

• note Union Traffic v TGWU CA said picketing could = procurement =
encouraging others breach contract

• One Money Mail v Ria 15 CA W approached R, yet R nonetheless liable for inducing breach - R knew of the exclusivity clause in the contract thus knew would be breached - more than 'active steps'

• Carty: BMTA weak authority coz appeared be organised attack on C - seems be actual inducement

• Hart & Honoré say D's conduct needs be at least 1 of influencing factors in
C's decision breach

• contrast Batts Combe Quarry v Ford - mere acceptance of gift not procuring

• There is an argument that this line of cases 'impliedly' overruled by OBG but not mentioned

• Meretz Investments v ACP Toulson LJ seems deny liability for inconsistent transactions - D's conduct must have operated 'on the will' of contracting party

• Some uncertainty coz of overlap with Equity- inconsistent dealing etc - Carty says unhelpful

• O'Sullivan seems distinguish 'knowingly making an inconsistent dealing' entirely consistent with OBG!

• Lord Macnauhten (Allen v Flood) - D must be person who 'pulls the strings'

• Carty says inconsistent transactions shouldn't be tortious per se - I agree!



• must know of existence of contract and intend cause breach of that i) Knowledge

• requirement makes sense coz about protecting contractual interests

• Mainstream Properties v Young subjective knowledge - honest doubt as to whether contract/clause exists enough to avoid liability - can't just say must have been obvs - constructive knowledge insufficient

• but Hoffman endorsed Emerald Construction v Lowthian so reckless indifference does suffice (subjective) i.e deliberately ignoring/wilfully turning blind eye - as opposed to mere neg

• Deakin & Randall say this definition may create undesirable evidential difficulty for C
ii) Intention to induce breach
Page 3 of 18 • clear from OBG don't need intend cause loss & foreseeable breach/inevitable insufficient

• Meretz Investments v ACP considered that their reliance on legal advice meant they were entitled to do as they did

• but arguably the key thing instead should be whether they genuinely believed no breach

• unclear whether advised as to 'breach' specifically c)


usation of Breach of Contract

• if no contract then fails/no breach

• breach of restrictive covenant counts - Reckless v United Artists

• C must show willing & able perform - Long v Smithson

• if C's contract void/voidable then no tort - Proform Sports v Proactive

• also not tortious persuade party terminate the contract lawfully


• Must be more than nominal damage - Rookes v Barnard

• may be inferred if must inflict damage on ordinary course of business Goldsoll v Goldman - usually lost profits

• BMTA v Salvadori - expenses incurred in investigating D's organised undermining of C recoverable coz 'directly attributable'

• The Nodeshda Krupskaya - cost of substituting vessel recovered

• Noxfoldia v NGA - all intended damage & non-remote consequences recoverable

• here, as result of strike, had to make redundancies - redundancy payments recoverable

• Pratt v BMA - suggests injury to feelings recoverable once pecuniary loss shown

• following Lonrho v Fayed (conspiracy) injury to reputation unlikely

• Note: query - does Lumley extend beyond breach of contract to other breaches? e.g statute? Traditionally yes (Clerk & Lindsell)

• OBG Lord Nicholls left this q open - could apply to stat duties, equitable obligations

• Note: measure of liability under Lumley not restricted to quantum of damages for breach of contract (suggested in Said v Butt/Lumley)

Def ence of justification:

• In limited circs, D may be able argue conduct justified - must have been carrying out a 'legal, social or moral duty' - De Jetley Marks v Greenwood,
Glamorgan Coal v SWMF

• not just about saying acted in gf but is flexible - Slade J Greig v Insole

• Romer LJ Glamorgan said have regard to nature of contract, position of parties, ground for breach, means of procurement, relation of procurer to breacher & aim of procurer

• Carty says is about D being able to point to an interest outweighing C's 'equal or superior right'
Page 4 of 18 • Hill v First Finance - developer struggling with mortgage - made settlement with bank - bank would take over on condition architect replaced - architect sued bank but held justified coz equal/superior right

• what about when your contract entered into later? Gardner says no defence need temporal priority

• Swiss Bank v Lloyds says justifiable

• Carty: suggests things like protecting health/safety would suffice

• Also seems like public interest/policy can provide defence

• Stott v Gamble film banned - justified the breach between C & theatre

• Brimelow v Casson TU induced manager of theatre break contract with
Chorus Girls - being treated badly & resorting to 'immorality' justified

• seems involve balancing of interests - rejected by HC Aus - need superior right
(Zhu v NSW)

• Reed v Operative emphasised that even if legit justification, must genuinely have relied on that

• Meretz Investments case relevant here too - spoke of 'entitlement to do as they did'

• if that suffices for intention then could mistakenly believe you have justification & not be liable - Bagshaw & McBride

• O'Sullivan suggests defence would probs apply to pro advice save where intentions bad (Carty agrees)

• Howarth says should abolish defence - too vague

• but says could replace with broader 'fair just & reasonable' assessment - just as uncertain ii)


'unlawful means tort' (UM)

clarified it is distinct from Lumley & is a tort of primary liability

req uires D use unlawful means against X to cause C to suffer loss (3 party)

Lindley Quinn v Leathem said joy of this tort = C can allege wrong done to others reaches him

Hoff man OBG said UM indifferent to the nature of interest damaged

Req uirements: (Carty)/OBG




• must be intention to cause loss - predominant purpose must be injure C rather than pursue own advantage (Dillon LJ Lonrho v Fayed)

• pre OBG was requirement that harm be 'targeted' or 'aimed at' C - causing C
harm needed be specific object of the conduct (Allen/Lonrho)

• but Hoffman abandoned it - placed too much strain on intention - though clearly require strong causal connection - he prefers control scope with narrower interp of 'unlawful means'
Page 5 of 18 • seemed suggest intention same for this & procuring breach thus Carty explains that requisite intention will be found if 'desired end or the means of achieving a desired end' = intentional

• Carty suggests this significantly widens scope of liability

• Lord Nicholls OBG gave conflicting messages - on one hand appeared agree with Hoffman but also suggested intention for UM must be in 'deliberate'
sense of causing harm

• Total Network Lord Neuberger said fine line between intending make profit at C's expense & intending harm - this is distcintion courts have traditionally sought make

• B HL in OBG didn't spend much time on it so hopefully haven't entirely changed it f)


awful means:

• There was a 4:1 split on this point in OBG - Hoffman v Nicholls

• Lord Hoffman (majority) approach - UM element as narrow/restricted

• Starting point: actionable civil wrongs

• appeared also accept breach of contract - following Rookes v Barnard, Carty says yes - though O'Sullivan says unclear

• but also narrowed it further - actionable wrongs must be of a type that harm C
because they interfere with X's freedom to deal with C

• Carty says this means X must be someone C has an economic interest in!

• Hoffman approved of RCA Corp v Pollard - R exclusive right exploit Elvis records - P selling bootlegging recordings (crim) - held no UM claim - nothing
P did interfered with R freedom deal with Elvis

• but this narrow definition qualified coz Hoffman said UM tort can still succeed even if wrong wouldn't have been actable against X coz X suffered no loss e.g Lonrho v Fayed

• note procuring/inducing breach of contract can = unlawful means - common in industrial action

• e.g if TU induced EEs of C's supplier to breach their contracts, as way of getting at C

• Lord Nicholls (minority) approach - sees UM as much broader

• includes common law torts, stat torts, crimes, breach of contract, breaches of trust/eq obligations, breaches of confidence etc

• said CL should embrace 'all acts a D is not permitted to do whether by civ or crim law'

• said surprising/odd if C not protected against use of crime intended harm him

• ofc not all crim offences actionable in tort

• support from Lord Devlin Rookes v Barnard

• Also differed on defining role of X - said tort should provide remedy where C
harmed through 'instrumentalism of a 3P' - much broader than Hoffman seems just need a 'causal link'

• thus take 'speeding courier' e.g - D owns pizza company - tells drivers to speed so they run C's pizza delivery co. out of business - on Nicholls view = UM tort but not on Hoffman's - drivers (X) not dealing with C!

• Lord Walker critical of Nicholls approach in OBG but appeared apply tin
Total Network!

Ha rm/loss
Page 6 of 18

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