Can You Sue a Competitor for Tortious Interference with Contracts in Vermont?

Fierce competition is a normal part of doing business in Vermont, whether you are bidding on commercial construction projects in Chittenden County, distributing specialty food products out of Montpelier, or developing resort real estate near Stowe and Killington. A rival company is legally permitted to offer lower prices, pitch better service, and compete aggressively for market share. However, when a competitor crosses the line from lawful competition into economic sabotage-deliberately inducing your contracted suppliers, exclusive distributors, or property sellers to break their agreements with you-Vermont law provides a powerful tort remedy.

Under Vermont Supreme Court precedent, a third party who intentionally and improperly disrupts your existing contracts or prospective business relationships can be held liable not only for your lost profits, but also for reputational harm and, in cases of actual malice, punitive damages. Below, we break down the legal elements of tortious interference in Vermont, examine three high-stakes commercial scenarios, and explain how damages are proven in Superior Court.

Elements of Tortious Interference in Vermont: Existing Contracts vs. Prospective Relations

Vermont law recognizes two distinct-yet closely related-causes of action: tortious interference with an existing contract and tortious interference with prospective contractual or business relations. In Williams v. Chittenden Trust Co., 145 Vt. 76 (VT Supreme Court 1984), the Vermont Supreme Court adopted Section 766 of the Restatement (Second) of Torts, establishing that to prevail on a claim for interference with an existing contract, a plaintiff must prove:

1. The existence of a valid contract between the plaintiff and a third party;
2. Knowledge of that contract by the defendant competitor;
3. Intentional and improper inducement or causation by the defendant resulting in the third party failing to perform the contract; and
4. Actual pecuniary harm to the plaintiff proximately caused by the third party's breach, as affirmed in Foster & Gridley v. Winner, 169 Vt. 621 (VT Supreme Court 1999).

When no signed contract exists yet-such as an ongoing vendor relationship or a deal in final negotiations-you may still sue for intentional interference with prospective business relations. However, as the Vermont Supreme Court explained in Gifford v. Sun Data, Inc., 165 Vt. 611 (VT Supreme Court 1996), where the Court reversed a jury verdict against a computer equipment supplier because the supplier had not used wrongful means, competitors enjoy a broader privilege of lawful competition when competing for prospective business. To defeat the competition privilege in a prospective relations claim, the plaintiff must prove that the competitor used improper or wrongful means (such as fraud, defamation, economic coercion, or trade secret theft) or acted with the sole malicious purpose of harming the plaintiff rather than advancing a legitimate competitive interest.

High-Stakes Commercial Interference Scenarios in Vermont

A Competitor Actively Poaching Key Vendors and Disrupting Supply Chains

In specialized Vermont industries-ranging from precision aerospace manufacturing in Rutland and Vergennes to craft beverage and dairy production-businesses rely on long-term supply and manufacturing contracts with key vendors. If a competitor merely offers a vendor higher volume on future, uncontracted orders, that is lawful competition under Gifford v. Sun Data, Inc., 165 Vt. 611 (VT Supreme Court 1996). Conversely, if a competitor knowingly threatens to blacklist a supplier unless the supplier cancels your existing production contract, or circulates false statements questioning your company's solvency or product safety to sever your vendor relationships, that conduct constitutes actionable tortious interference and may also violate the Vermont Consumer Protection Act, 9 V.S.A. § 2453.

Inducing a Breach of Exclusivity Agreements

Exclusive distribution, franchise, and licensing agreements are prime targets for tortious interference litigation. When your business holds an exclusive territory agreement to distribute medical devices, building materials, or commercial software across Vermont, and a competitor offers the manufacturer or a key sales executive a secret indemnity agreement or kickback to bypass your exclusivity clause, you do not have to sue only the breaching contracting party. You can sue the interfering competitor directly in tort for inducing the breach of the exclusivity covenant.

Sabotaging Pending Commercial Real Estate Deals

One of the most famous tortious interference precedents in Vermont history arose from a sabotaged purchase agreement. In Mitchell v. Aldrich, 122 Vt. 19 (VT Supreme Court 1960), the plaintiffs had reached an agreement to purchase property subject to a lender's appraisal, when a third party-fully aware of the pending deal-stepped in and induced the seller to convey the property to him instead for a slightly higher price. The Vermont Supreme Court ruled in favor of the aggrieved buyers, holding that the 'privilege of competition' does not justify knowingly intruding upon an existing agreement to destroy another's bargain for personal advantage. When a rival developer or investor uses insider knowledge, fraudulent misrepresentations, or improper payoffs to derail a signed Letter of Intent or Purchase and Sale Agreement in Burlington, Stowe, or Manchester, Mitchell v. Aldrich, 122 Vt. 19 (VT Supreme Court 1960) provides direct authority for tort recovery.

Calculating Compensatory and Punitive Damages in Vermont

Proving Compensatory Damages and Lost Profits

Because tortious interference is an intentional tort rather than a simple breach of contract, the measure of damages under Williams v. Chittenden Trust Co., 145 Vt. 76 (VT Supreme Court 1984) and Foster & Gridley v. Winner, 169 Vt. 621 (VT Supreme Court 1999) is broader than standard contract remedies. A prevailing business can recover:

• Direct Pecuniary Loss of the Contract: The net lost profits the business would have earned had the vendor, client, or property seller performed as promised.
• Consequential Business Losses: Extra expenses incurred to source emergency replacement inventory, project delay penalties, and proven harm to corporate goodwill and market reputation.

To survive summary judgment, lost profit calculations cannot be speculative; plaintiffs typically retain a Certified Public Accountant or forensic economist under 12 V.S.A. § 1643 to model historical profit margins ('before-and-after' or 'yardstick' methods).

Meeting Vermont's 'Actual Malice' Standard for Punitive Damages

Unlike ordinary breach-of-contract lawsuits where punitive damages are generally unavailable, tortious interference allows a jury to award punitive damages-provided the plaintiff meets Vermont's rigorous malice standard. Under Brueckner v. Norwich University, 169 Vt. 118 (VT Supreme Court 1999) and Skaskiw v. Vermont Agency of Agriculture, 198 Vt. 187 (VT Supreme Court 2014), punitive damages require proof that the competitor's conduct was intentional, deliberate, and had the 'character of outrage frequently associated with crime,' accompanied by actual malice-defined as bad faith, personal ill will, spite, hostility, or a deliberate intent to destroy the plaintiff's business.

Step-by-Step Process to Sue a Competitor in Vermont

Step 1: Document Notice of the Contract and Serve a Cease-and-Desist

Because knowledge of the contract is a mandatory element under Williams v. Chittenden Trust Co., 145 Vt. 76 (VT Supreme Court 1984), immediately send a formal written notice via certified mail to the competitor's executives putting them on indisputable notice of your exclusive contract or pending real estate agreement and demanding they cease interference.

Step 2: Preserve Communications and Subpoena Third-Party Records

Preserve all emails, text messages, and call logs from the vendor, client, or broker explaining why they backed out of the deal. These communications are vital to proving causation and improper inducement.

Step 3: File the Complaint and Seek a Pre-Judgment Attachment or Injunction

File Form 100-00050, Vermont, Superior Court Civil Division, Complaint and Form 100-00268, Vermont, Superior Court Civil Division, Summons with Notice of Appearance in the appropriate trial court, such as the Vermont Superior Court, Chittenden Civil Division, Burlington (175 Main Street, Burlington, VT 05401), the Vermont Superior Court, Rutland Civil Division, Rutland (83 Center Street, Rutland, VT 05701), the Vermont Superior Court, Washington Civil Division, Montpelier (65 State Street, Montpelier, VT 05602), or the Vermont Superior Court, Windham Civil Division, Newfane (3047 Main Street, Newfane, VT 05345). Where appropriate, file Form 100-00053, Vermont, Superior Court Civil Division, Civil Division Motion for a preliminary injunction or a pre-judgment Writ of Attachment under V.R.C.P. 4.1.

Step 4: Conduct Discovery and Forensic Damages Modeling

Serve Form 100-00501, Vermont, Superior Court Civil Division, Civil Subpoena on third parties to uncover internal emails, side agreements, or indemnity promises between the competitor and the breaching party, and retain an economic expert to quantify net lost profits.

Step 5: Mediation, Summary Judgment, and Jury Trial

Defeat the competitor's 'privilege of competition' affirmative defense at summary judgment by demonstrating wrongful means or existing contract intrusion, and present your compensatory and punitive damages case at mediation or before a Vermont jury.

How Much Does It Cost in Vermont?

• Superior Court Civil Filing Fee: $295 entry fee under 32 V.S.A. § 1431.
• Subpoena and Sheriff Service Costs: Approximately $75 to $150 per defendant or third-party witness served.
• Forensic CPA / Economic Damages Expert: Retaining an expert to prepare a court-ready lost profits report and testify at deposition and trial typically costs between $5,000 and $20,000.
• Commercial Litigation Attorney Fees: Vermont business litigators typically charge $300 to $500 per hour (or hybrid contingency arrangements in high-value tort claims), with full litigation through summary judgment and trial ranging from $25,000 to $100,000+.

How Long Does the Process Take?

• Statute of Limitations: Under 12 V.S.A. § 511, actions for tortious interference with contract or economic relations are governed by Vermont's 6-year statute of limitations for civil actions (though related claims involving personal property or defamation may be subject to the 3-year limit under 12 V.S.A. § 512).
• Preliminary Injunction / Attachment Hearing: Usually heard within 3 to 6 weeks of filing.
• Full Civil Litigation Timeline: Complex commercial tort cases in the Vermont Superior Court generally take 12 to 24 months to reach a jury trial or final settlement.

If a competitor's underhanded tactics have derailed a lucrative contract or commercial real estate transaction, consult an experienced Vermont commercial litigation attorney in our directory to evaluate your evidence and pursue full financial recovery.

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