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Common Business Disputes that Lead to Litigation

On Behalf of | Jul 15, 2022 | BUSINESS LAW

Most businesses will find themselves in court at least once or twice. Whether it’s small claims, mediation, arbitration, or litigation, business disputes must be resolved one way or another. Here is a list of the most common reasons that businesses, whether self-employed individuals or mega-corporations, end up in court.

If you are facing a possible dispute, seek help from a business litigation attorney. at The Sterling Law Group, A.P.C. for immediate assistance in Roseville, and nearby cities.

Shareholder Complaints

For many businesses, shareholders have rights, and they can file suit if they feel the board of directors violated their fiduciary duty to act in the shareholders’ best interest. If a corporation took on too much debt or made a risky acquisition, shareholders might file a class action lawsuit complaining that their dividends were negatively impacted due to the senior management’s negligence.

Business Partner Disagreements

Business partnerships that are no longer harmonious often end up in court to essentially get divorced. Dissolving a business partnership can be even messier than a divorce because there are often more than just two partners involved, and each partner may have a different ownership stake in the company (silent partners as well). Also, like a divorce, all of the assets and debts must be divided. The process can be long and complicated. Business partners can also wind up in court for other reasons than to dissolve their company. There may be an issue of one partner misusing funds, acting negligently, and so on.

Contract Disputes

Businesses may have a myriad of different contractual obligations at once. They may be leasing their business space from another business, like a property management company. They may have contracts with their clients, such as a water delivery company that has a one-year contract with each and every one of their customers. They may have contracts with their suppliers, manufacturers, subcontractors, employees, equipment leases, distribution agreements, franchise contracts, and so on. In the web of all those contracts a business is subject to on a daily basis, a breach of contract is bound to occur at some point. Not meeting a contractual obligation can definitely be cause for litigation.

Labor Issues

From worker’s comp claims to wage disputes and discrimination cases, businesses are subject to a wide range of responsibilities when it comes to their workforce. If any of those rights are not met, litigation can result. Having an employment contract as well as an employee handbook can help avoid some of these legal issues but not always. Other labor issues can include wrongful termination, FMLA violations, unemployment compensation, harassment, severance packages, overtime or tip disputes, and OSHA violations.

Product Liability and Lemon Law

If your business sells a product that causes an injury, your business can wind up in court. Consumer goods with design, manufacturing, or instructional/warning defects that create a hazard leave a business open to product liability (or the “lemon law” if you are in the auto industry). A product liability claim has these four factors:

  • Your company’s product malfunctioned.
  • Someone was injured or suffered losses.
  • The injured person was using the product correctly.
  • Your company’s defective product caused the injury.

Roseville Business Litigation Attorney Near You

If it looks like your business is headed for court, lawyer up with Sterling Law Group’s top-rated Sacramento business attorneys. Contact us today for a free review of your case.