Litigation can be distracting for any business. Officers and directors must devote time and resources to defending against the lawsuit. There is a chance that a company can avoid litigation by getting legal help before any dispute reaches the point of litigation. Here are some common causes of commercial litigation so you know potential pitfalls.
Breach of Contract
Perhaps the most common cause of commercial litigation is contract disputes. Each party to an agreement has rights and obligations under the contract. Each signatory has the right to file a lawsuit against the other if they fail to do what they have promised.
One party may lack the resources or capacity to perform as promised. Alternatively, they may read the contract differently and think they do not have to do what you claim they must.
In a breach of contract lawsuit, a court will either interpret the contract or rule on whether one or both parties have failed to follow the terms of the agreement.
Intellectual Property Infringement
Intellectual property is often the lifeblood of a business that has invested substantial money in developing products and processes. Intellectual property can include patents, copyrights, and trademarks.
Federal law gives intellectual property owners the right to file a lawsuit when they believe someone else infringes on it. These cases are often high-stakes matters that could be existential for a business. Intellectual property cases may also be highly scientific, especially involving patents.
Employees often sue businesses for various reasons. Perhaps the most common cause of employment litigation is when an employee claims discrimination. Sexual harassment is one of the most frequent types of discrimination lawsuits. Employment discrimination is prohibited under both federal and state law. These lawsuits could lead to large awards and negative publicity.
In addition, businesses may be sued over how they pay employees. The Fair Labor Standards Act (FLSA) imposes various requirements on businesses, including the obligation to pay minimum wage and time and a half overtime for certain salaried employees. Employees often file class action lawsuits if they believe the employer violated the FLSA.
Shareholders may claim that their rights under a shareholder agreement are being violated. The company may take specific action denying a shareholder such rights as inspecting books or records or attending meetings.
Alternatively, the shareholders may file a derivative lawsuit on behalf of the company to recover when directors or officers have taken actions that violate the fiduciary duties they owe to the company.
Finally, a minority shareholder may also file a lawsuit against a majority shareholder for breach of fiduciary duty or shareholder oppression.
Disputes Between Partners or Co-Owners
In some cases, fellow partners or owners of the business may see things differently. One may claim that their rights are being violated under the terms of a partnership or operating agreement. In the meantime, their stake in the business is at risk. These disputes can be complex and antagonistic, and they require the early assistance of an attorney in the hopes of lowering tensions.
Avoiding Potential Commercial Litigation
Getting legal advice beforehand can help avoid disagreements or mistakes leading to commercial litigation. An attorney could review an agreement or a potential course of action, guide you on how to follow it and ensure that the other party complies.
If you are in a dispute, you should contact a lawyer early in the disagreement. There are times when you may be able to avoid litigation. Your attorney could advise you about a creative resolution to the problem, or they can communicate with the other side, hoping to resolve the dispute. Hiring a lawyer could help you avoid litigation.
Contact Our New Jersey Commercial Litigation Attorneys at Herold Law, P.A. for Legal Help
Businesses should contact our New Jersey commercial litigation attorneys at Herold Law, P.A. if they are involved in any dispute. Our lawyers can give you practical advice and work to protect your legal rights. To schedule a consultation, call 908-679-5011 or contact us online. We proudly serve clients across New Jersey.