In the recent case of Crystalens Ltd v White the court examined if a director or employee could be personally liable for procuring or inducing a breach of contract when acting within their employment scope of authority and in good faith.
By the 1853 case of Lumley v Gye if a person:
intentionally by direct or indirect means causes another person to breach another contract with a third party or
prevents or hinders the performance the performance of that contract
so that the third party suffers damage
that person is liable to the third party for all damages suffered under the tort of procuring breach of contract.
However by Said v Butt (1920) a director or agent of a company who causes the company to act in breach of its contract is not personally liable and owes no duty of care in tort to ensure its company fulfilled its contractual obligations.
Here Crystalens had entered into a collaboration agreement with another company of which White was MD. Later the agreement was terminated because of unpaid invoices by Crystalens.
In this case the court struck out the Crystalens claim on the above principles holding that the authority quoted by the claimant (an authoritative textbook used by practitioners that stated that a director could be liable personally if s/he had the relevant knowledge or intention) did not relate to this specific tort but to others.
Accordingly it upheld the principle of limited liability and on the facts the MD of the company could not be held liable personally for procuring a breach of contract while he was acting within the scope of his authority and in good faith to his company’s interests.
