5 Types of Business Disputes that Frequently End in Commercial Litigation
There is a stereotype that running a business leaves you open to all kinds of liability. McDonald’s even got sued for the temperature of its coffee! Fortunately, while it is true that you need to rely on expert legal advice to protect your business interests, reports of litigation are widely exaggerated.
Nonetheless, the risk of litigation does exist when operating a business and you should be proactive in proofing your business against lawsuits as much as possible. You are much more likely to face litigation through one of these five types of business disputes:
1. Partnership Disputes
Everything starts out great when you begin the partnership. Then one of you argues that you deserve more of the profits than are being shared. Or perhaps one of you wants to leave the partnership and take the rights to a product with them. Maybe one of you believes the business should spend more on marketing while the other believes more money should be spent on research and development. There are many reasons these partnership disputes can arise, and they are rarely simple issues.
Typically, attorneys and judges will encourage negotiation, mediation or arbitration to try to resolve these disputes first. However, in contentious cases, litigation in court may become necessary.
2. Shareholder Disputes
Shareholders have a vested interest in how a business is run. If the leadership is making mistakes in managing the business, the shareholders may suffer a loss of profit. Shareholders may worry that certain decisions will have a negative impact on the business, and, as a result, they may decide to take action before they suffer the losses. Therefore, shareholders may bring a lawsuit against the business or its executives for mismanagement or other misconduct resulting in financial losses, among other things.
3. Employment Disputes
Many employees work in “at will” states, which means that they can be fired for any reason at any time. But some employees may still claim they were fired for an illegal reason, such as discrimination. Contract employees may sue their company if they feel their contracts were violated, such as failure to pay according to the contractual agreement. Other employees may sue over unsafe working conditions, a hostile working environment, or the denial of benefits.
4. Breach of Contract
Contracts cover just about every aspect of your business, including vendor and supplier relationships, employment, mergers and acquisitions, shareholder agreements, franchise agreements, and much more. But just because you have something in writing doesn’t mean that everyone will do what they said they were going to do in that contract. You might have to bring legal action to get those parties to live up to their contractual obligations.
Breach of contract can also occur when people disagree about how to interpret the contract. People may think they are behaving within the terms of the contract, but you may think they are not. Other breach of contract issues may involve people knowingly withholding information, engaging in illegal activity, or a change of circumstances that make it impossible to honor the contract. Litigation may be necessary to resolve these disputes. The types of breaches that can occur are unlimited and dependent on the type of contract involved (i.e., business to business contracts, business to customer contracts, business to employee contracts, business to supplier/vendor contracts, etc.).
5. Customer Disputes
Customer disputes may be the type of litigation that most people think of when they think of corporate lawsuits. These cases arise from customers suing businesses over their defective products, mistreatment they received, or false claims. These are not your typical customer complaints that they take to the manager. These are serious disputes that may involve large amounts of damages.
Again, it is usually wise to attempt to resolve these complaints through negotiation, mediation or arbitration, but this may not be possible and some of them end up in litigation.
The thing to remember is to always consult with an experienced business attorney to discuss your business disputes. You need to understand your rights and obligations, as well as your legal options. Your business attorney will help you explore options that can prevent litigation, such as negotiation or arbitration. But if you can’t resolve your dispute through pre-litigation means, your attorney can represent you in filing a lawsuit, ensuring you have a strong advocate defending your interests.
The experienced business attorneys at Denton Peterson PC in Arizona can help with whatever business dispute you may be involved in. Our team can help you in any legal business dispute, including attempt to resolve the dispute prior to litigation (i.e., negotiations, mediation, arbitration) as well as representing you in litigation if a lawsuit has been, or needs to be, filed. Our goal is to protect your interests and minimize your liability, no matter what path we have to take through the legal process. Contact us in Arizona today to discuss the details of your business dispute and find out how one of our dedicated business attorneys is able to help you.
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Mesa, AZ 85213
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