Business litigation involves actions tried in civil court arising out of business relationships. Employee disputes and breached contracts can have a serious impact on a company’s reputation and profits. This type of litigation can arise in any industry, in numerous situations, and may involve any of a wide range of legal issues including:
Breach of Contract
Contracts are common in the business world, and so are contract disputes. When contract disputes arise, provisions of the contract regarding breach should prevail. However, not all contract disputes are easily resolved, the circumstances surrounding the breach can mitigate the outcomes of court action. The main types of contract breaches are:
Anticipatory: An anticipatory breach occurs when a party to a contract demonstrates through actions or words that it does not intend to comply with one or more obligations under the contract.
Fundamental: A fundamental breach of contract occurs when a party fails to complete a contractual term so essential to the agreement that the other party cannot complete its responsibilities under the contract.
Material: When one party receives a significantly different result or significantly less benefit than specified in the contract, a material breach has occurred.
Minor: A minor breach of contract is less severe than a material breach. Although it gives the harmed party the right to sue for damages, it does not excuse that party from further performance under the contract.
Fraud
In business, fraud can occur as deception or misrepresentation through claims or omissions. Fraud can involve intentional deception to secure unfair or unlawful gain or to deprive someone else of a legal right. Victims may sue to recover monetary damages. Unfair and Deceptive Trade Practice claims involve unfair methods of competition and practices involving all business activities Fraud litigation can encompass several claims and other legal issues, including:
- Misrepresentation
- Omission
- Non-disclosure
- Fraudulent concealment
- Tortious interference ( inducement of breach of contract)
- Intellectual Property Issues
Shareholder Disputes
Disputes between co-owners of a business can go to court when a solution is not agreed upon by the owners.
These disputes may include who owns the business and with what percentage, improper transfers of business interests, the value of a business in order for one partner to be bought out, fiduciary actions brought on behalf of shareholders, and violations of the business By-Laws or Operating Agreements.
Class Action
Class action lawsuits can arise in many circumstances, but they frequently involve a class of individuals as plaintiffs and businesses as defendants.
Class actions are cases where numerous plaintiffs have been affected by the same allegedly wrongful action.
Common examples include:
- Product Liability
- Data Breaches
- Pollution
- Debt Collection Practices
- Employment-Related Practices
Before a court action can proceed a judge must certify the class. The plaintiffs have to show that so many people have been affected by the alleged action that it is impractical to join them all as parties in the lawsuit.
The issues in the case affect:
- All Members of the Class
- The Claims and Defenses Are Typical of the Whole Class
- The Representative Parties Can Adequately Protect the Interests of the Class
- A Class Action Is the Best Method for Pursuing Justice
Trade Secrets
Trade secrets are intellectual property (IP) rights on confidential information which may be sold or licensed thus they have potential or actual economic value. To qualify as a trade secret, the information must be:
- Commercially Valuable Because It Is Secret
- Be Known Only To A Limited Group of Persons
- Be Subject To Reasonable Steps To Keep It Secret
Reasonable steps, by the rightful holder of the information to keep it secret, including the use of confidentiality agreements for business partners and employees. The legal protection of business secrets forms part of the general concept of protection against unfair practices.
In general, unfair practices include industrial or commercial espionage, breach of contract, and breach of confidentiality. A trade secret owner, however, cannot stop others from using the same technical or commercial information, if they acquired or developed such information independently by themselves through their own R&D, reverse engineering, or marketing analysis.