As a business owner, finding yourself in a legal dispute can be one of the most disruptive things that can happen. A dispute with another party can cost your business critical time, money, and resources. Business litigation can occur for various reasons. Understanding how business disputes arise – and the options for resolving them – can help you pursue an efficient and favorable resolution to a disagreement or legal claim that affects your company.
Common Causes of Business Disputes
Some of the most frequent reasons for business disputes include:
Contractual Disagreements
Parties in a business relationship may disagree about or misunderstand the terms, obligations, or deadlines of a contract. Disputes frequently arise due to ambiguous or sparse contract language, which can lead to parties having differing interpretations of their respective rights and obligations.
Partnership or Shareholder Conflicts
Business partners may have disputes over how to run the company, or minority shareholders may become involved in conflicts with majority owners or corporate boards over issues such as strategic decisions, transactions, profit distribution, or ownership rights. Partnership and shareholder conflicts may arise when parties feel like majority owners have shut them out of decision-making or have used their authority against minority owners.
Employment Issues
Employees can bring legal claims against their employers for various issues, including disputes over salary/commissions/benefits, discrimination, sexual harassment, a hostile work environment, or wrongful termination. Issues can arise due to unclear employment contracts or employee handbooks, or disagreements over adverse employment decisions made by the company.
Intellectual Property and Confidentiality Issues
IP disputes can arise from claims of unauthorized use of patents, trademarks, copyrights, or trade secrets. Alternatively, parties may have disagreements over their rights and obligations under IP licensing agreements. Finally, claims may involve disputes over ownership of intellectual property.
Financial and Payment Disputes
Business disputes frequently arise due to disagreements or claims involving payment obligations or other financial rights and responsibilities. For example, parties may become involved in conflicts over whether payments for goods and services have become due. Parties to commercial loan arrangements may also become involved in legal disputes over alleged defaults. Finally, co-owners can have disagreements over capital contributions, profit distributions, or the allocation of income and losses.
How to Resolve Business Disputes
Companies may have several avenues to pursue to seek a fair and favorable resolution to a business dispute, including:
- Maintaining Open Communication – When a counterparty raises an issue with your company, keeping an open line of communication allows your business to address those issues early, before they escalate into more serious legal disputes. In some cases, your company can avoid a formal dispute by engaging in honest and professional discussions with counterparties to resolve misunderstandings and restore your relationship to a healthy state.
- Negotiation and Mediation – Parties may also attempt to resolve a dispute through informal negotiations, or, if talks fail, by hiring a professional mediator to assist them in negotiating a settlement.
- Alternative Dispute Resolution – When disputes escalate, parties may have a contractual obligation or may choose to submit the dispute to arbitration to obtain an efficient, confidential resolution.
- Litigation as a Last Resort – As a last resort, parties may take a dispute to court to have a jury or judge decide the parties’ rights and obligations.
Companies can also mitigate the risk of business disputes by having clear, comprehensive, and up-to-date written agreements that expressly define each party’s respective rights and responsibilities within the business relationship.
Contact a Business Litigation Lawyer Today
If your company has become involved in a legal dispute, understanding how the issue arose and what steps you can take to resolve the conflict can help protect the business’s interests. Contact Christensen Law PLLC today for a confidential consultation with a business litigation attorney to learn more about your options for resolving a legal disagreement.
