Interference with Prospective Economic Advantage

The issue our team is addressing is whether or not Fiat is liable of interference with prospective economic advantage as it relates to Suzuki’s breach of contract with Volkswagen. In order to determine the answer to this question; we will need to make assumptions in the original case between Volkswagen and Suzuki, analyze what qualifies as a tort of interference with prospective economic advantage and apply the facts to the elements of the tort.

Volkswagen and Suzuki have not gone to arbitration yet to determine whether or not Suzuki is liable of breach of contract with Volkswagen with the procurement of diesel engines from Fiat. What we know at this time is that in order for a contract to be established there must be competent parties involved, an offer, mutual agreement, consideration and legality in subject matter (Emerson, 2009). Breach of contract is failing to perform any term of a contract without a legitimate legal excuse and in essence amounts to a broken promise to do or not do an act (http://definitions.uslegal.com/b/breach-of-contract/). In an effort to evaluate Fiat’s accountability in this exercise we are making the assumption here and later in the background information that the judgment in the case will be that Suzuki did breach their contract with Volkswagen when procuring the diesel engines from Fiat.

So what about Fiat, are they liable? In order for interference with prospective economic advantage to be applicable the following is required (1) an economic relationship between [the plaintiff and some third person] containing the probability of future economic benefit to the [plaintiff], (2) knowledge by the defendant of the existence of the relationship, (3) intentional acts on the part of the defendant designed to disrupt the relationship, (4) actual disruption of the relationship, [and] (5) damages to the plaintiff proximately caused by the acts of the defendant (www.lectlaw.com/def/i084.htm).

We have reviewed the elements of the tort interference with prospective economic advantage; now let’s look at the background and facts of the issue. Suzuki and Volkswagen are recognized leaders in the automotive industry. Suzuki’s small car manufacturing knowledge and Volkswagen’s advanced fuel-efficient technology is what brought the two companies together (Takahashi, 2011). They established a partnership in 2009 resulting in Volkswagen holding 19.8% stake in Suzuki and Suzuki holding 1.5% stake in Volkswagen (Ramsey, 2009). There were no joint operations executed since the partnership was established (Takahashi, 2011). Another assumption on our part is that the contract stated, “Suzuki and Volkswagen would operate as single entities; however, they must work only on behalf and benefit of the partnership, except for noncompetitive activities.”

Suzuki procured diesel engines from Fiat. Fiat is another leader in small car manufacturing. This procurement led to the issue of whether Suzuki