The Most Common Types of Business Disputes
Starting a business is often a rewarding, yet challenging endeavor. Ensuring that your business is profitable is likely at the forefront of your mind. It is also important to consider the types of business disputes that could arise after starting your business. Many new business owners are surprised to learn of the many types of business disputes that can happen. Learning about the most common types of business disputes can help you avoid costly litigation when trouble strikes. In some cases, business owners can resolve disputes outside of the courtroom through negotiation. Unfortunately, some business disputes required litigation to protect your company’s integrity. We will discuss some of the most common disputes that all business owners face below.
Business Torts
When one business suffers a financial loss because of another business’s misconduct, it can bring a business tort lawsuit to recover damages. The financial losses suffered by the plaintiff must have occurred in the past. In other cases, businesses will bring a lawsuit in anticipation of future financial losses. For example, a business may sue another business, claiming that the business’s actions will result in lost business opportunities and lost revenue. Losses claimed in business tort lawsuits can also include non-economic damages, such as loss of relationships and reputation.
Many business tort lawsuits involve some sort of negligence, such as negligent misrepresentation. They can also include fraud. In lawsuits involving fraud, one party claims that the other party made false statements or omitted information during the course of a business transaction. To prove fraud, the plaintiff must show that they relied on the omission or false statements to make a decision relevant to the transaction. A plaintiff needs to show that the defendant’s fraudulent action or negligent misrepresentation caused them to lose money.
Employment Disputes
As a business owner, your main focus is likely to ensure your business stays profitable. However, a large part of running a business involves dealing with employment disputes. There are many different types of employment disputes you may become involved in, including the following:
- Racial discrimination disputes
- Sexual harassment claims
- Claims involving whistleblowers and retaliation
- Claims involving the US Equal Employment Opportunity Commission (EEOC)
- Claims involving non-compete agreements or Severance agreements
- Claims involving employment contracts
- Wrongful termination cases
- Wage and hour disputes, including minimum wage, waiting on payment, overtime, tipped work, and misclassification of payment
Employment disputes can take up a significant amount of your time and assets to resolve. One of the best ways to decrease the likelihood of employment disputes is to hire a business lawyer to review your employment practices and contracts and make you aware of any red flags before the dispute arises. Some business owners tend to put off dealing with employment disputes because they are understandably busy. Doing so can be detrimental to your business, however. The sooner you speak to a lawyer about your employment dispute, the better your chances of resolving it favorably.
Contract Disputes
Contract disputes are incredibly common. They can occur between your business and another business, between partners or business owners, or between your business and your employees. When a person or business breaches a contract with you, they are essentially failing to honor their end of the agreement. In some cases, the contract itself is unclear, ambiguous, or incomplete. In other cases, another business, a vendor, or one of your employees may clearly breach your contract with them.
Some contracts include arbitration clauses, requiring you to take your disputes before an arbitrator. In other cases, you may decide to take your contract dispute to court and litigate it. Because contract disputes are so common, it is wise to hire experienced business lawyers to write and review your contracts. A skilled lawyer will be able to pick up on any red flags in your business contracts that could make you vulnerable.
Disputes Related to Purchasing Assets
Growing your business is one of the most important parts of business ownership. However, disputes can arise when you purchase business assets or other businesses. Business assets are owned by another business entity, not an individual. Acquiring another business or large piece of property is exciting, but disputes often arise. In some cases, those involved dispute the distribution of profits among business members after a business sale. The parties will also disagree on the classification of assets, specifically which funds are personal and business funds.
Many businesses require any large sale to be approved by the business’s board members. In some cases, board members will not agree to the transfer, leading to disputes between the parties. Finally, there could be other contractual or legal issues with the transfer of assets or property. For example, if a business owner transferred a business in his or her last will and testament, problems could arise during the probate process.
Partnership Disputes
Partnership disputes are also fairly common. No matter how well you operate your business, and how well you communicate with your business partner, disputes can arise. Business partners are often extremely busy, and they rarely plan for every type of contingency related to disputes. Partnership disputes often include disagreements regarding business strategy, compensation for partners or employees, and business succession planning. When a business begins to grow, the partners may also disagree on the future of the company. One partner may want to invest in more assets or acquire other businesses aggressively. The other partner may be more inclined to take a cautious approach and not take on more debt. Business disputes can also arise regarding the partnership’s sale or when one partner leaves the partnership.
Contact an Experienced Business Lawyer Today
Business conflicts are incredibly common, but they can be time-consuming and costly. The best thing you can do to prevent business conflicts and properly resolve conflicts when they happen is hire an experienced business lawyer. At Fox & Moghul, Attorneys at Law, we have the experience needed to represent your best interest when conflicts arise. Contact us today to schedule your initial consultation.
