Inducing breach of contract (C)

Question 1

What are the give five stages in inducing breach of contract?

Answer 1

OBG v Allan [2008] 1 AC 1.
1. X must breach the contract it has with P.
2. D must know that its action would bring about a breach of contract.
3. D must intend to bring about that breach, either as an end in itself, or as a means to an end.
4. D must bring about that breach by positive acts of persuasion, encouragement, or assistance.
5. D may have a defence of lawful justification.

Question 2

Step one: Breach of contract?

Answer 2

Contractual performance falls below the standard expected of the party under the terms of the contract.
- No need for the contract to be in writing.
- McGill v Sports and Entertainment Media Group [2017] 1 WLR 989.
- Contract just be valid.
- Proform Sports Management v Proactive Sport Management [2006] EWHC 2903 (Ch).
- Breach must relate to term of the contract, be it express or implied.
- Fraser Turner v Pricewaterhousecoopers Ltd [2018] EWHC 1743 (Ch).

Question 3

Steps 2 and 3: Knowledge and intention.

Answer 3

Rossleigh Ltd v Leader Cars Ltd 1987 SLT 355.
- Must be aware of at least the generalities of the term which is breached.
- “Mere recklessness or ‘turning a blind eye’ is [not] a sufficient factor unless such actings are tantamount to enable the court to conclude that such actings were in effect intentional…”
- OBG v Allan [2008] 1 AC 1.
- The fact that a breach of contract is a foreseeable consequence of conduct is insufficient (Millar v Bassey overruled): actual intention required: [43]; [166]; [264].
- Allen v Pollock and Dodd [2020] QB 781.
- Honest belief that no breach of contract involved sufficient to avoid liability; importance of legal advice.

Question 4

Step 4: Positive act.

Answer 4

Must demonstrate that D offered inducement, assistance or encouragement.
- British Motor Trade Association v Gray 1951 SC 586.
- Calor Gas v Express Fuels Ltd 2008 SLT 123.
- Positive act required: standing back and not taking steps to prevent failure to perform insufficient.
- Aviva Insurance v Oliver [2019] EWHC 2824 (Comm).
- Inducer still liable if it is the third party who hatches the scheme that involves a breach of their contract.
- Kawasaki Kisen Kaisha v James Kemball Ltd [2021] EWCA Civ 33.
- Conduct must operate on the mind or will of X, i.e. be capable of influencing its decision whether or not to breach.

Question 5

Step 5: Defence?

Answer 5

D may argue that the inducement was justified in the circumstances.
- Brimelow v Casson [1924] 1 Ch 302.
- Good morals?
- “These defendants, as it seems to me, owed a duty to their calling and to its members, and, I am tempted to add, to the public, to take all necessary peaceful steps to terminate the payment of this insufficient wage”.
- Trade Union and Labour Relations (Consolidation) Act 1992, s219(1)(a).
- Inducement pursuant to legitimate strike not actionable.
- Edwin Hill v First National Finance [1989] 1 WLE 225.
- Reliance on an “equal or superior right”?
- If “[D] reaches an accommodation with [X], which has [the] effect of interfering with [X]’s contract with [P], [D] is still justified notwithstanding that the accommodation may be to the commercial advantage of [D] or [X] or both.”