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The 4 most common causes of business litigation

Business litigation is sometimes necessary when two or more parties have entered a complex dispute. While business litigation can be time-consuming, stressful and costly, it often helps parties to gain clarity over a situation and gain closure so that the business can move forward.

However, businesses should consider other ways of resolving the issue before deciding to embark on business litigation. Sometimes, simple strategies such as improved communication can go a long way toward preventing litigation. The following are the four most common causes of business litigation:

Shareholder disputes

The disputes between shareholders are a common problem and one that is difficult to solve. If shareholders disagree on the future direction of the company, things can get heated. Drafting contracts that have dispute resolution clauses can help to prevent issues from escalating quickly, but if a dispute involves complex aspects of the law, business litigation may be necessary.

Fraud

As a business owner, you need to aggressively defend your interests. If you have worked with someone whom you believe has engaged in fraudulent activity that resulted in damages, you should take action to hold them legally responsible for their criminal behavior.

Employment disputes

Disputes between employers and employees can arise easily, especially when sound policies and procedures are not securely in place. Many employers find themselves involved in disputes whereby they are accused of discrimination after firing an employee for underperformance, for example. You must defend your business from these claims.

Breach of contract

One of the main reasons why contracts are put in place is to prevent disputes from arising and offer resolutions to certain scenarios. However, if a contract is poorly written, not thorough enough or contains contradictions, it may be the primary cause of a dispute. Additionally, if one party simply decides to ignore the contract and not acknowledge the terms whatsoever, it will be necessary for legal action to be taken.

While you should try to take reasonable steps to avoid business litigation when you can, it is important to know when it is necessary to protect your business and claim the damages that you deserve. By being proactive in your approach, you will have a better chance of a successful legal claim.

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