Tortious Interference in Texas: When a Competitor or Third Party Disrupts Your Business

By Hank FasthoffJuly 6, 2026

Texas encourages vigorous competition. Offering a better price, a superior product, or a more attractive deal to win a customer away from a competitor is lawful, even if the competitor loses revenue as a result. But when a third party goes beyond competition and intentionally disrupts an existing contract or prevents a prospective business relationship from forming through wrongful conduct, the injured party has a cause of action for tortious interference.

Texas recognizes two distinct claims: tortious interference with an existing contract and tortious interference with a prospective business relationship. Both protect against intentional disruption by third parties, but they have different elements, different burdens of proof, and different implications for what conduct is actionable.

Tortious Interference with an Existing Contract

A plaintiff asserting tortious interference with an existing contract must prove four elements: a valid contract existed that was subject to interference, a third party willfully and intentionally interfered with the contract, the interference proximately caused the plaintiff's damage, and actual damage or loss occurred. Powell Industries, Inc. v. Allen, 985 S.W.2d 455, 456 (Tex. 1998).

Only a stranger to the contract can commit tortious interference. A party to the contract can breach it, but can't tortiously interfere with it. Tortious interference is a claim against outsiders who cause a contracting party to breach.

"Willful and intentional" means the defendant was more than a willing participant. A plaintiff must show the defendant knowingly induced one of the contracting parties to breach its obligations. Ferrara v. Nutt, 555 S.W.3d 227, 243 (Tex. App. - Houston [1st Dist.] 2018). The defendant must have either desired to bring about the interference or known that interference was certain or substantially certain to result from the defendant's conduct. The plaintiff doesn't have to prove the defendant intended to cause injury, only that the defendant intended to cause the interference.

Interference must cause a breach of some obligatory provision of the contract. If no contractual obligation was violated, there's no tortious interference even if the defendant's conduct made performance more burdensome or difficult. However, making performance substantially more burdensome can constitute interference if it leads to a breach.

Terminable-at-will contracts are subject to tortious interference claims. In Sterner v. Marathon Oil Co., 767 S.W.2d 686, 689 (Tex. 1989), the Texas Supreme Court held that the terminable-at-will status of a contract is no defense to tortious interference with its performance.

Tortious Interference with a Prospective Business Relationship

A plaintiff asserting tortious interference with a prospective business relationship must prove five elements: a reasonable probability that the plaintiff would have entered into a business relationship with a third party, the defendant either acted with a conscious desire to prevent the relationship from occurring or knew the interference was certain or substantially certain to occur, the defendant's conduct was independently tortious or unlawful, the interference proximately caused the plaintiff injury, and the plaintiff suffered actual harm or damages. Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909, 923 (Tex. 2013).

What separates a prospective relationship claim from an existing contract claim is the third element: the defendant's conduct must be "independently tortious or unlawful." This requirement doesn't apply to interference with an existing contract (where any intentional interference is actionable), but it's required for prospective relationships because courts recognize that vigorous competition can cause prospective deals to fail, and that alone shouldn't produce liability.

In Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711 (Tex. 2001), the Texas Supreme Court established that conduct that's "merely sharp or unfair" can't support a claim for tortious interference with a prospective business relationship. When two parties are competing for a business interest to which neither is contractually entitled, a cause of action can't arise from lawful conduct, even if that conduct is aggressive or is regarded as unfair. Harm resulting from lawful competition isn't compensable through the interference tort.

"Independently tortious or unlawful" conduct includes fraud, defamation, assault, illegal boycotts, misrepresentation, misappropriation of trade secrets, violation of a noncompete agreement, trespass, and other conduct that would be actionable under a recognized tort independent of the interference claim itself. The plaintiff doesn't have to prove every element of the independent tort, only establish that the defendant's conduct would be actionable under a recognized cause of action. Coinmach, 417 S.W.3d at 924.

Defenses

Justification is an affirmative defense to both types of tortious interference. A defendant who establishes justification avoids liability even if the plaintiff proves all four (or five) elements of the claim. Prudential Insurance Co. of America v. Financial Review Services, Inc., 29 S.W.3d 74, 77-78 (Tex. 2000).

Justification exists when the defendant acted in the bona fide exercise of its own rights (enforcing its own contract, exercising a legal privilege, or pursuing a legitimate interest) or when the defendant had an equal or superior right in the subject of the interference. A defendant who files a legitimate lawsuit against a third party, causing that third party to breach its contract with the plaintiff, may be justified if the lawsuit was brought in good faith to enforce the defendant's own rights.

Competition privilege protects lawful competitive conduct. Offering better terms, superior products, or more attractive pricing to win business away from a competitor is privileged even if it causes the competitor's existing contracts to be terminated or prospective relationships to fail. The privilege doesn't extend to conduct that's independently tortious (fraud, defamation, trade secret misappropriation) or that violates a specific legal obligation (a noncompete agreement, for example).

Lack of intent is a defense if the interference was accidental or the defendant didn't know about the contract or prospective relationship. Tortious interference requires intentional conduct. A defendant who didn't know about the plaintiff's contract and didn't intend to interfere with it hasn't committed the tort.

No causation is a defense if the contract would have been breached (or the prospective relationship would have failed) regardless of the defendant's conduct. If the contracting party was already planning to breach before the defendant's involvement, the defendant's conduct wasn't the proximate cause of the plaintiff's harm.

Statute of Limitations

Tortious interference is governed by a two-year statute of limitations under CPRC § 16.003, shorter than the four-year period for breach of contract. A plaintiff who discovers the interference more than two years before filing suit is barred, even if a related breach of contract claim would still be timely. The discovery rule may apply to toll the limitations period if the interference was concealed.

Damages

A plaintiff who prevails on a tortious interference claim can recover actual damages including the pecuniary loss of the benefits of the contract or the prospective business relationship, consequential losses (lost profits, lost business opportunities, additional costs incurred because of the interference), and, in appropriate cases, emotional distress or harm to reputation if those damages were reasonably expected to result from the interference.

If the defendant secured the business relationship the plaintiff lost, the plaintiff may recover the defendant's gains as a measure of damages (on the theory that the defendant shouldn't profit from wrongful conduct). Exemplary damages may be available under CPRC § 41.003 if the interference involved fraud, malice, or gross negligence.

Practical Recommendations

Identify the specific contract or prospective relationship that was disrupted. A tortious interference claim requires a specific contract (with an identifiable provision that was breached) or a specific prospective relationship (with evidence of a reasonable probability that it would have resulted in a contract). General allegations that a competitor "disrupted my business" without identifying the contract or relationship don't state a claim.

For prospective relationship claims, identify the independently tortious or unlawful conduct. Losing a deal to a competitor who offered better terms isn't actionable. Losing a deal because a competitor defamed your business, misrepresented your products to the customer, or misappropriated your trade secrets to underbid you is actionable. Without independently tortious conduct, the claim for interference with a prospective relationship fails regardless of the harm.

File within two years. Tortious interference claims carry a two-year statute of limitations, and the clock runs from the date of the interference or the date the plaintiff discovered (or should have discovered) the interference. A plaintiff who identifies the interference but waits more than two years to file loses the claim.

Preserve evidence of the defendant's knowledge and intent. Emails, text messages, recorded statements, and witness testimony showing that the defendant knew about the contract or prospective relationship and intended to disrupt it are the evidence that distinguishes actionable interference from lawful competition. Without evidence of knowledge and intent, the defendant's conduct looks like competition, and competition is what Texas law encourages.