The sanctity of contract is a foundational principle of private law. Parties who voluntarily enter into contractual relationships are generally bound by the terms of their agreement, and the law ordinarily protects the rights and interests that arise from such relationships. However, contractual relationships do not exist in isolation. In the course of commercial dealings, employment relationships and business transactions, persons who are not parties to a contract may become aware of, influence, facilitate, frustrate or otherwise affect its performance.

While not every form of third-party involvement in a contractual relationship is legally objectionable, the law recognises circumstances in which such interference may become actionable. A third party who knowingly and intentionally procures a contracting party to breach an existing obligation, or employs unlawful means to disrupt an existing contractual relationship, may incur liability notwithstanding that the third party was not a party to the original agreement.

This raises an important question: at what point does legitimate commercial conduct cross the line into unlawful interference with contractual relations? The question is particularly significant in a competitive commercial environment, where businesses routinely compete for customers, employees, suppliers, investments and commercial opportunities. The law must, on the one hand, preserve the sanctity and enforceability of contractual obligations and, on the other, avoid imposing liability merely because a third party's legitimate commercial activities adversely affect an existing contractual relationship.

This article examines the nature and scope of the tort of unlawful interference with contractual relations under Nigerian law. It considers the circumstances in which third-party conduct may attract liability, the essential elements required to establish the tort, and the significance of knowledge, intention, inducement, unlawful means and causation. It also examines relevant English authorities and the extent to which they may assist in clarifying the development of the Nigerian position, before considering the remedies available to a party whose contractual relationship has been unlawfully disrupted.

What exactly is Unlawful Interference?

At its simplest, unlawful interference with contract occurs where a person, who is not a party to a contract, intentionally interferes with another's contractual relationship through unlawful means, thereby causing damage¹.

The tort is therefore premised on the existence of three actors:

1. the person whose contractual rights are affected;

2. the person who is bound by the contract; and

3. the third party who interferes with the contractual relationship.

For example, where A contracts with B to supply goods, and C, knowing of the contract, unlawfully persuades B to disregard his contractual obligations to A, C may, depending on the circumstances, incur liability to A notwithstanding the fact that C was never a party to the contract.

This is significant because the general rule of privity of contract is that a contract creates rights and obligations between its parties and ordinarily cannot impose contractual liabilities upon strangers to it. The tort of unlawful interference does not abolish that rule. Rather, it operates independently of the contract by imposing tortious liability upon the third party for his own wrongful conduct.

Thus, the action is not founded on the proposition that the third party has breached the contract. Rather, it is founded on the proposition that the third party has committed an independent tort by unlawfully interfering with the contractual relationship.

The English law of inducing breach of contract has its origins in Lumley v Gye², where the court recognised liability against a third party who knowingly procured a contracting party to breach an existing contractual obligation. The principle subsequently developed through a series of cases concerning the broader concept of interference with contractual relations, before the modern English law drew a clearer distinction between inducing breach of contract and other forms of unlawful interference.

The Supreme Court of Nigeria in Sparkling Breweries Ltd & Ors v Union Bank of Nigeria Ltd ³described the tort of unlawful interference with the business of another as consisting of “one person using unlawful means with the aim and effect of causing damage to another.” The Court further emphasised that the means employed must itself be unlawful; otherwise, the tort is not established.

This formulation remains an important starting point for understanding the Nigerian position. Businesses routinely compete for customers, employees, suppliers and commercial opportunities. A competitor may, for instance, offer better terms to a customer who is already dealing with another business. An employer may seek to recruit an employee who is presently employed elsewhere. A supplier may receive competing offers from different purchasers. Such conduct, without more, does not necessarily constitute a tort. The critical issue is whether the conduct crosses the boundary between legitimate commercial activity and unlawful interference with an existing contractual relationship.

DEVELOPMENT OF THE TORT IN ENGLISH LAW

The modern law of interference with contractual relations has its roots in the English decision of Lumley v Gye⁴. In that case, the defendant knowingly procured an opera singer, Johanna Wagner, to disregard her contractual undertaking to perform exclusively for the claimant. The court recognised that a person who knowingly procures another to commit an actionable breach of contract may himself incur liability, notwithstanding that he is not a party to the contract.

The significance of Lumley v Gye lies in the recognition that contractual rights may, in appropriate circumstances, attract protection against deliberate interference by third parties. The liability of the third party, however, does not arise from the contract itself. It arises from the third party's own conduct in procuring the breach.

The doctrine subsequently developed beyond the relatively straightforward situation contemplated in Lumley v Gye. In Quinn v Leathem⁵, the House of Lords considered broader forms of intentional interference with business and contractual relations. Later decisions, including D. C. Thomson & Co Ltd v Deakin⁶ and Torquay Hotel Co Ltd v Cousins⁷, further expanded the language of interference, with the latter recognising that interference could extend beyond procuring an actual breach to conduct which prevented or hindered the performance of a contract.

This expansion, however, created considerable uncertainty as to the precise boundaries of the tort. In particular, it became difficult to determine whether the various forms of intentional economic interference constituted manifestations of a single underlying tort or distinct causes of action with different requirements.

That uncertainty was addressed by the House of Lords in OBG Ltd v Allan⁸, which represented a significant turning point in the development of the law. The House rejected a broad "unified theory" of economic torts and distinguished the tort of inducing breach of contract, originating in Lumley v Gye, from the separate tort of causing loss by unlawful means. The former is concerned with accessory liability for another person's breach of contract, while the latter is a form of primary liability arising from the defendant's own unlawful conduct.

This distinction is important to the present discussion. It demonstrates that “unlawful interference with contractual relations” is not necessarily a single, undifferentiated cause of action. The precise nature of the defendant's conduct determines the applicable legal principle and, consequently, the elements which the claimant must establish.

The English development is particularly useful when examining Nigerian law, where the terminology of unlawful interference, inducement of breach and unlawful means has sometimes been used in overlapping contexts. The next question, therefore, is whether Nigerian law has developed a similarly distinct framework for these forms of interference.

THE NIGERIAN POSITION

Nigerian law recognises that a person who is not a party to a contract may, in appropriate circumstances, incur liability for unlawfully interfering with the contractual or business relationship of others. The leading authority is Sparkling Breweries Ltd & Ors v Union Bank of Nigeria Ltd⁹, where the Supreme Court considered the tort of unlawful interference with another's business. The Court emphasised that the interference must involve the use of unlawful means with the aim and effect of causing damage; where the means employed are not unlawful, the tort is not established.

The Nigerian courts have also recognised the more specific form of interference arising from the inducement or procurement of breach of contract. In Nissan (Nig.) Ltd v Yoganathan & Anor¹⁰, the Court of Appeal held that a third party who, with knowledge of an existing contract and without justification, facilitates or intentionally induces its breach may be liable in tort. The decision is particularly significant because it demonstrates that the absence of contractual privity between the claimant and the alleged interferer does not, by itself, provide a defence. The liability is founded on the third party's own conduct in relation to the existing contractual obligation.

The significance of the doctrine in contemporary Nigerian employment and commercial relationships is further illustrated by the 2026 decision in Overland Airways Ltd v Hussain & Ors¹¹. The National Industrial Court found, on the evidence before it, that the second defendant had induced the employee to breach his employment contract and training-bond agreements. Of particular importance was the evidence that the new employer had been aware of the employee's existing obligations and nevertheless retained him. The Court distinguished legitimate employee recruitment from circumstances in which the recruitment amounted to inducing a breach of existing contractual obligations.

These authorities demonstrate that Nigerian law recognises two closely related but analytically important concerns: unlawful interference with business or contractual relations on the one hand, and the specific tort of inducing or procuring a breach of contract on the other. The distinction becomes important when determining precisely what a claimant must prove in a particular case.

The Nigerian position is therefore not that every third-party interference with a contract is actionable. Rather, liability depends upon the character of the interference, the defendant's knowledge and intention, the means employed, the resulting breach or injury, and the causal connection between the defendant's conduct and the loss suffered.

Essential Elements of the Tort

The determination of whether conduct amounts to unlawful interference with contractual relations ultimately depends on the nature and circumstances of the interference alleged. Nevertheless, Nigerian authorities identify certain fundamental requirements which a claimant must satisfy before liability can arise. These requirements provide a useful framework for determining whether the conduct complained of is actionable¹².

Existence of a Valid and Subsisting Contract

The starting point is the existence of a valid contractual relationship between the claimant and another party. There must be an identifiable contractual right or obligation which the defendant is alleged to have interfered with.

This requirement is illustrated by the decision of the Supreme Court in Sparkling Breweries Ltd & Ors v Union Bank of Nigeria Ltd¹³. In that case, the appellants alleged, among other things, that the respondent bank had unlawfully interfered with their business by cancelling letters of credit. The Supreme Court rejected the claim, finding that the necessary contractual foundation had not been established. The Court held that the non-existence of a binding agreement negated the claim of unlawful interference.

The significance of this requirement cannot be overstated. The tort is intended to protect existing contractual or business interests from unlawful disruption; it is not designed to transform every lost commercial opportunity or failed negotiation into an actionable claim.

Accordingly, a claimant alleging interference must first demonstrate the existence of a legally recognisable contractual relationship and identify the contractual interest which the defendant allegedly disrupted.

This is in tandem with the position under the English law as affirmed in the cases highlighted above. See also Northamber plc v Genee World Ltd¹⁴

Knowledge of the Contract

The defendant must ordinarily have knowledge of the contractual relationship which he is alleged to have interfered with. This is particularly important where the claim is based upon the inducement or procurement of a breach.

The rationale is straightforward. It would be difficult to characterise conduct as an intentional interference with a contractual relationship where the alleged interferer had no knowledge that such a relationship existed in the first place.

In Nissan (Nig.) Ltd v Yoganathan¹⁵, the Court of Appeal recognised that a third party may incur liability where he knowingly and without justification facilitates or intentionally induces a breach of contract between other parties. The decision is significant because it demonstrates that the absence of privity between the claimant and the alleged interferer does not, by itself, defeat the claim.

Knowledge, however, should not be conflated with liability. Mere awareness that two parties have a contractual relationship does not make every subsequent interaction with either party tortious. There must be further conduct which satisfies the other requirements of the tort.

Intention to Interfere

The interference must be intentional. The tort is concerned with deliberate conduct directed towards disrupting an existing contractual or business relationship, rather than merely accidental or incidental consequences of otherwise lawful conduct.

Nigerian judicial consideration of the tort, drawing from Sparkling Breweries, has identified intentional conduct directed at causing damage as a significant component of the claim. In Engr. Chinedu Thompson v Union Bank of Nigeria Plc & Anor¹⁶, for example, the National Industrial Court reiterated that the claimant must establish that the defendant knew of the contract, intentionally employed unlawful means to induce or procure its breach, and that the conduct resulted in the injury complained of.

The requirement of intention serves as an important safeguard. Commercial activities frequently have consequences for third parties. A competitor's legitimate decision to offer better prices, a prospective employer's decision to recruit talent, or a customer's decision to change suppliers may adversely affect an existing contractual relationship. Such consequences do not, without more, establish the requisite intention to commit the tort.

The court must therefore distinguish between conduct which merely has the effect of disrupting a contractual relationship and conduct which is deliberately directed towards bringing about that disruption through legally impermissible means.

The Use of Unlawful Means

This is arguably the most important feature of the tort. It is required that the ‘interference’ involves unlawful means.

The Supreme Court in Sparkling Breweries¹⁷ stated the principle in clear terms: unlawful interference with the business of another involves the use of unlawful means with the aim and effect of causing damage, and “to constitute the tort, the means used must be unlawful otherwise the tort is not established.”

This requirement is what separates actionable interference from ordinary commercial competition.

A third party may legitimately seek to attract a customer away from a competitor, negotiate with a supplier who presently deals with another business, or recruit an employee who is available to change employment, provided that the conduct does not involve an independently unlawful act or amount to an actionable inducement of contractual breach.

Conversely, where the third party deliberately employs unlawful conduct to procure the breach of an existing contract, the law may intervene. The unlawful means may therefore provide the critical link between the defendant's conduct and the legal wrong.

In this regard, Nissan (Nig.) Ltd v Yoganathan¹⁸ is instructive in recognising that a third party who knowingly and without justification facilitates or intentionally induces the breach of another person's contract may be liable.

The concept of justification is also important. The law does not seek to prohibit every form of interference with contractual relations. There may be circumstances in which a third party's conduct, although affecting an existing contractual relationship, is legally justified. The question is therefore not simply whether the defendant interfered, but whether the interference was accompanied by the requisite unlawful conduct and lacked sufficient legal justification.

Damage and Causation

Finally, the claimant must establish that the unlawful interference caused legally recognisable damage. The existence of wrongful conduct without consequential damage will not ordinarily justify an award of damages.

The requirement of causation ensures that the defendant is held responsible only for loss sufficiently connected to the unlawful interference. The claimant must therefore demonstrate not merely that a contractual relationship deteriorated, but that the defendant's actionable conduct caused the breach, disruption or loss for which compensation is sought.

The evidential burden is significant. In Chinedu Thompson v Union Bank of Nigeria Plc & Anor¹⁹, the National Industrial Court rejected the claimant's allegation of tortious interference because there was no evidence that the defendant knew of the claimant's employment contract, intentionally used unlawful means to procure its breach, or was responsible for the claimant's loss of employment.

The decision illustrates an important practical point: allegation of interference is not proof of interference. A claimant must establish the constituent facts linking the defendant to the alleged contractual injury.

REMEDIES

Where unlawful interference with contractual relations or inducement of breach is successfully established, the principal remedy is damages to compensate the claimant for the loss caused by the defendant's wrongful conduct. The claimant must, however, establish a sufficient causal connection between the interference and the loss claimed.

The decision in Sparkling Breweries Ltd & Ors v Union Bank of Nigeria Ltd²⁰ illustrates the importance of proving the loss for which damages are sought. Although substantial damages had been awarded at trial, the Court of Appeal set aside the awards, and the Supreme Court ultimately upheld the dismissal of the claims. The case demonstrates that proof of wrongful interference alone is insufficient; the claimant must also establish the basis and extent of the loss attributable to the wrongful conduct.

Depending on the circumstances, general and special damages may be available. General damages are intended to compensate for loss naturally resulting from the wrongful act, while special damages relate to particular losses which must be specifically pleaded and proved. The distinction is particularly important where the claimant seeks compensation for identifiable commercial expenditure, lost profits or other specific financial consequences.

In appropriate cases, exemplary damages may also be considered where the conduct of the defendant warrants such an award. In Overland Airways Ltd v Hussain & Ors²¹, the claimant sought both general and exemplary damages following the successful claim that the second defendant had induced the first defendant to breach his employment and training-bond agreements. The National Industrial Court recognised the distinction between the two forms of damages and held that the claimant was entitled to damages having established the inducement.

An injunction may also be available where the circumstances justify equitable intervention, particularly where the wrongful interference is continuing or threatened. The purpose of such relief is to restrain further wrongful conduct and prevent continuing or imminent harm. The availability of an injunction will, however, depend upon the nature of the cause of action established and the applicable principles governing injunctive relief.

The appropriate remedy will ultimately depend upon the facts of each case. A claimant should therefore formulate the relief sought with precision and ensure that the evidence establishes both the wrongful interference and the loss or continuing harm for which the remedy is sought.

Recommendations

The developing commercial environment makes it increasingly important for businesses to understand the limits of third-party interaction with their contractual relationships and to involve legal counsel where proposed dealings may affect existing contractual obligations.

First, businesses should ensure that important contractual relationships are properly documented and that material obligations, particularly exclusivity, non-solicitation and restrictive covenants, are clearly expressed. A party seeking to enforce contractual rights must first be able to establish the existence and terms of those rights.

Second, businesses should exercise caution when dealing with the employees, customers, suppliers and contractors of competitors. Where there is actual or constructive knowledge of an existing contractual restriction, deliberate steps to procure a breach may create unnecessary litigation exposure.

Third, parties who suspect interference should preserve evidence of the alleged conduct. Correspondence, contractual documents, communications, recruitment records, commercial proposals and other contemporaneous evidence may become crucial in establishing knowledge, intention, inducement, causation and loss.

Finally, businesses should distinguish between protecting a contractual relationship and attempting to prevent legitimate competition. Contractual rights are valuable commercial assets, but their protection must operate within the boundaries established by law.

Ultimately, careful drafting, informed commercial decision-making and early legal intervention remain the most effective means of reducing the risks associated with unlawful interference with contractual relations.

CONCLUSION

The law protects contractual relationships from deliberate and unlawful interference, but it does not prohibit legitimate commercial competition. The mere fact that a third party causes a contractual relationship to fail or a business to lose an opportunity does not, without more, constitute a tort. Liability arises where the interference is intentional, unlawful, unjustified and sufficiently connected to the breach or loss complained of.

For businesses, the practical lesson is clear: contractual rights must be protected not only through carefully drafted agreements, but also through vigilance against unlawful third-party conduct. At the same time, businesses must recognise that the pursuit of legitimate commercial interests remains lawful, even where it adversely affects a competitor.

The dividing line, therefore, is not competition versus interference, but lawful competition versus unlawful interference.

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