Any business is always at risk of disputes – and the bigger the company is, the greater the possibility of legal issues happening.
Knowing the different types of commercial litigation helps protect businesses and helps resolve any issues that may disrupt their operations.
Even if you have a well-meaning business partner, both intentional and unintentional issues may arise. There are other methods to handle the dispute in a less disruptive way, such as mediation and arbitration. However, there are situations wherein the only way to resolve an issue is by the traditional litigation process.
What is Commercial Litigation
Commercial litigation is a branch of law that encompasses all business and work-related disputes, both federal and state-based. This type of litigation can range from product liability to debt-based issues to antitrust lawsuits.
It’s always best to avoid this type of litigation since it can negatively impact your business. If you can, choose to go with mediation and arbitration. Many organizations even choose these two dispute resolution processes because they can save 50% to 80% on expenses compared to litigation.
Here are examples of areas that fall under a commercial litigation:
- Disputes over non-compete agreements
- Franchise disputes
- Breach of fiduciary duty cases
- Business dissolutions
- Employment disputes
- Debt collection actions
- Consumer fraud and consumer protection issues
- Shareholder and partnership disputes
- Disputes over corporate management and control
This list proves how broad commercial litigation is. Even the most straightforward matters can cause extra and unnecessary expenses for your business. If you win, you can get an award that more than covers the costs of the litigation. However, the risk of losing is always significant, causing you to pay for large damage awards aside from the expenses you incurred.
Understanding the most common types of commercial disputes can increase your chances of avoiding them:
1. Contract Disputes
Contractual disputes can happen on several circumstances, such as:
- Breach of a contract’s terms of the agreement, whether intentional or unintentional
- A supplier failing to deliver the goods on time or failing to provide the correct goods
- Dispute with a former employee who violated a non-compete agreement
A legal contract binds two or more parties to perform any obligation listed on its terms. All parties involved must conform with what is agreed upon as it is written in the contract. When a party fails to perform or conform with the terms, a breach of agreement occurs.
The action that the non-breaching party could perform will depend on the injury inflicted. Some of the remedies that the offended party can do are:
- quasi-contractual remedies
- receive payment for damages
- cancellation and restitution of the contract.
2. Tortious Interference
If a third party interfered with a legal contract between two or more parties, this third party is considered to performing tortious interference. This interference should have caused damages to one or more parties in the contract, though.
The actual claim for negligent or intentional wrongdoing in any business relationship is known as a business tort. One typical example of tortious interference is when an employee who violated a non-compete contract gets hired by another business that is aware of the breach. The new company where the employee is now working is liable for tortious interference. Unfair competition is also another form of business torts.
3. Antitrust and Trade Regulation
Antitrust laws seek to prevent harm to both consumers and businesses due to unfair practices and anticompetitive behavior. There are two primary federal antitrust laws:
- Sherman Act
- Robinson-Patman Act
Sherman Act section 1 aims to prevent any restraints that can cause unreasonable trading. Section 2 of the same legislation makes acts of monopoly unlawful or even attempts to monopolize. On the other hand, the Robinson-Patman act prevents any price discrimination that can harm other businesses. Any violation of these regulations is liable for commercial litigation.
4. Corporate Disputes
Disagreements within a company, including partnerships and corporations, are considered corporate disputes. This can involve issues among business partners or shareholders. Commercial litigation of this type usually arises from businesses that seek to challenge mergers and acquisitions.
Protect Your Business from Effects of Commercial Disputes
It’s always best to secure legal advice when a dispute is still at its early stage. However, if commercial litigation is unavoidable, you’ll need an expert who has extensive experience in this matter, such as Judge Ruben Castillo. You need to secure the best possible outcome or face the crippling effect of losing out.
