Building a business starts with a relationship. Fundamentally, you have a buyer and a seller. As your business grows, so do the number of relationships you form. The more relationships you form and the bigger your business becomes, the more chances there are for disagreements. You cannot satisfy every client, employee, distributor, manufacturer, shareholder, member of the board or investor in your business. Disputes are bound to happen.
Business litigation begins when a third party to your business or someone inside your company files a civil complaint to a court or governmental agency. There is discord in the business relationship. You can choose to address the dispute in private or ultimately contest the complaint with court intervention.
When does a business pursue litigation?
As the business owner, you outweigh the costs of pursuing litigations against the benefits you will receive. Not all disputes are worth pursuing in court. However, if you have a strong case, litigation is an effective way to avoid future situations of a similar nature. Here are the common disputes in a business relationship that may warrant litigation:
Breach of contract
Partnership disputes
Shareholder disputes
Breach of fiduciary duty
Class actions
Employment law disputes
Intellectual property disputes
Fraud
You can protect your business by getting every agreement and transaction in writing. A written and signed agreement gives a business structure and protection.
Every business relationship should have a contract
In a business, contracts should govern every relationship. They tell each party what to do and how and when to do it. They set expectations for everyone. If everyone fulfills their contractual obligations, there would be no reason to go to court. When someone does not meet their obligations, you can use the contracts as evidence if any party pursues litigation.
