Texas Tortious Interference with Contract

By Darrell W. Cook · Last updated July 15, 2026

A competitor hires a key employee bound by a non-compete with your company. The employee’s new employer knew about the non-compete before extending the offer. The new employer hired anyway, betting that the non-compete would not hold up, or simply not caring.

Your company has two distinct claims here. Against the former employee, you have a breach of contract claim under the non-compete. Against the new employer, you have a tortious interference claim for inducing the breach. Both defendants can be sued in the same lawsuit, and the recoverable damages against each can be substantial.

Tortious interference is one of the most powerful business tort claims in Texas. It expands the plaintiff’s recovery options beyond the breaching party to anyone who knowingly induced or facilitated the breach, and it supports exemplary damages on a clear and convincing showing of malice. It also deters competitors and other third parties who might otherwise feel free to disregard their rivals’ contract rights. The Texas framework rewards the plaintiff who can prove the third party knew.

The four elements

Texas courts have settled on a consistent four-element framework:

The existence of a contract subject to interference. The contract must be valid and enforceable. Interference with an unenforceable contract, one that fails the statute of frauds, one that is illegal, one that is unconscionable, generally cannot support the claim. The plaintiff has to establish the contract’s existence and enforceability as a foundation for the claim.

A willful and intentional act of interference. The defendant must have acted with intent to interfere. Inadvertent interference, no matter how harmful, does not support the claim. The defendant also has to know about the contract, or at least have knowledge of facts that would lead a reasonable person to investigate.

Proximate cause. The defendant’s interference must have caused the breach or the injury claimed. If the contract would have been breached anyway, if the breaching party had independent reasons to breach unrelated to the defendant’s conduct, the proximate cause element fails.

Actual damages. The plaintiff has to show concrete economic harm caused by the interference. Nominal or speculative damages do not support the claim in most contexts.

Each element is contested in most cases. Defendants attack the contract’s enforceability, the intentionality of their conduct, the proximate cause connection, and the proof of damages.

The most common interference scenarios

Hiring an employee bound by a non-compete or non-solicitation. The textbook scenario. The new employer knew about the restrictions and hired anyway. The plaintiff sues both the former employee for breach of the restrictive covenant and the new employer for interference. See Non-Compete Agreements Texas.

Inducing breach of a supply or distribution contract. A competitor approaches a supplier or distributor under contract with the plaintiff and induces the supplier to switch sides. The competitor’s knowledge of the existing contract is the threshold issue.

Inducing breach of a customer contract. A competitor approaches the plaintiff’s customer and induces the customer to break the contract and take its business elsewhere.

Interference by an entity insider. A director, officer, or majority owner causes the entity to breach contracts with third parties. Whether the insider can be liable for interference with the entity’s own contracts is a complex question Texas has addressed in several cases, generally requiring the insider to have acted outside the scope of their role or against the entity’s interests.

Interference with real estate contracts. Particularly contracts for sale of real property where a third party induces the seller to renege.

The justification defense

Texas recognizes a broad justification defense to tortious interference claims. The defense is available when the defendant acted to protect a legal right or a colorable legal right.

Common justification arguments:

Competition. A competitor’s pursuit of business in competition with the plaintiff is privileged within limits. Aggressive but lawful competition does not support interference liability. The competition must stay within bounds, competitors cannot use fraudulent means, cannot induce breach of contracts they know about purely to inflict harm, and cannot engage in conduct that would itself be tortious.

The defendant’s own contract or property rights. A defendant asserting its own contract or property rights has justification even when those assertions interfere with the plaintiff’s contracts with third parties. The defendant’s right has to actually exist or at least be colorable, pure pretextual assertions do not justify.

Statutory or regulatory compliance. A defendant complying with legal obligations is justified even if compliance interferes with the plaintiff’s contracts.

Financial interest. A defendant with a legitimate financial interest in protecting a third party from a contract may be justified in advising the third party against the contract. The classic example is a lender advising its borrower against entering into a specific contract.

Justification is fact-intensive. The defendant has the burden of pleading and proving the defense. The plaintiff can defeat the defense by showing the defendant acted with actual malice or through improper means.

Damages

Tortious interference damages typically include:

Actual damages from the breach. The economic harm the plaintiff suffered because the contract was breached. The measure is similar to ordinary contract damages, direct loss plus consequential loss including lost profits where foreseeable.

Special damages. Specific losses traceable to the interference, such as costs incurred to mitigate, costs of replacement contracts, and lost goodwill.

Exemplary damages. Available under Chapter 41 of the Civil Practice and Remedies Code on a clear and convincing showing of fraud, malice, or gross negligence. The Chapter 41 caps apply. Tortious interference is a frequent context for exemplary damages because the underlying tort is by definition intentional. See Exemplary Damages in Business Cases.

Attorney’s fees. Not recoverable on the interference claim itself unless captured by a specific statutory or contractual framework. Pairing tortious interference with breach of contract or other fee-bearing claims is one way to capture fees.

Recovery is subject to no-duplicate-damages limitations. If the plaintiff recovers from the breaching party in full, the interference recovery against the third party may be reduced. The practical effect is that the multiple defendants increase recovery probability and create settlement leverage rather than multiplying total dollars.

Pleading and proof strategy

We plead tortious interference carefully because the defendants have multiple attack vectors. The pleading must establish:

• The specific contract interfered with, with its key terms.
• The defendant’s knowledge of the contract.
• The specific acts of interference.
• The breach that resulted.
• The damages caused.

Discovery focuses on the defendant’s knowledge at the time of the alleged interference. Email, meeting notes, employment offer documents, deal communications, all of it becomes significant evidence. Many tortious interference cases turn on a single document showing the defendant knew about the contract before taking the interfering action.

When the interference case connects to other claims

Tortious interference often travels with:

• Breach of contract against the breaching party (almost always pleaded together). See Breach of Contract.
• Trade secret claims when the interference involved misappropriation of confidential information. See Trade Secret Misappropriation Under TUTSA.
• Tortious interference with prospective business relations in related but distinct claims. See Tortious Interference with Prospective Business Relations.
• Civil conspiracy when multiple parties acted together. See Civil Conspiracy Under Texas Law.

Sue both, prove the knowledge, push for malice

We name both defendants. Most interference cases should include the breaching party and the interfering third party; suing only one leaves recovery on the table. Then discovery drives at the knowledge element, contested in nearly every case and decided by what the defendant knew at the moment of the interfering act. And where clear and convincing evidence of malice exists, we pursue exemplary damages, which is where these cases produce their largest recoveries.

The third party who knew about your contract and induced the breach anyway is exposed in ways the breaching party alone is not. Whether you are the plaintiff whose contract was interfered with or the defendant accused of interfering, the case is won on proof of knowledge, and that record gets built early or not at all.