{"id":12136,"date":"2020-12-16T08:00:12","date_gmt":"2020-12-16T14:00:12","guid":{"rendered":"https:\/\/legaltalktexas.hammerle.com\/?p=12136"},"modified":"2023-06-28T10:25:01","modified_gmt":"2023-06-28T15:25:01","slug":"common-types-of-business-litigation","status":"publish","type":"post","link":"https:\/\/hammerle.com\/legaltalk\/business-law\/common-types-of-business-litigation\/","title":{"rendered":"Understanding the Most Common Types of Business Litigation"},"content":{"rendered":"

Businesses of all sizes can face different types of disputes, and these disputes can end up as business litigation if the disputes are not resolved. Business litigation<\/a> can be a lawsuit between two businesses (i.e. vendor and customer), a customer and a business, employee and employer, or even between business partners. Typically, business disputes<\/a> revolve around a contract or a business relationship where one or both parties are seeking monetary damages for a failure in performance. Business disputes can relate to intangible property (intellectual property such as trademarks or patents) as well.<\/p>\n

Common Types of Business Litigation<\/h2>\n

Breach of Contract<\/h3>\n

The most common type of business litigation is breach of contract.\u00a0 In a breach of contract case, the parties enter into a contract \u2013 either written or oral \u2013 and one party fails to fully perform.\u00a0 To establish a breach of contract claim, the Plaintiff must prove the existence of a valid contract, a failure to perform by the other party, and harm that was caused by the failure to perform.\u00a0\u00a0 A failure to perform could be a failure to pay for goods or services provided, failure to deliver a purchased product, a failure to meet delivery timelines, or the failure to comply with any material term in a contract.\u00a0 Contract terms are first interpreted by the judge to determine the parties\u2019 responsibilities, unless someone argues the terms are vague and ambiguous.\u00a0 Under Texas law, the winning side can request recovery of their attorneys\u2019 fees.\u00a0 If under $20,000, the plaintiff can file in small claims court, but the $20,000 is the maximum amount the Court can award, including attorneys\u2019 fees.<\/p>\n

Fraud<\/h3>\n

If a contract exists, the contract usually controls the business relationship. However, a party can commit fraud that may allow a separate claim in a lawsuit.\u00a0 To prove fraud, a plaintiff needs to prove that the other party made a material representation, that is false, that the plaintiff relied on the false representation to enter into the transaction, and that the representation directly caused the plaintiff harm. Fraud is typically more difficult to prove than a breach of contract.\u00a0 The false representation must be material, must be a statement of fact and not an opinion.\u00a0 A good example is if someone sells a car and states the car is an automatic transmission, but in reality the car has a standard transmission.\u00a0 In this scenario, the purchaser relied on the statement that the car was an automatic transmission, that statement was false and received goods that were not as represented.\u00a0 In a fraud case, the winning party is not entitled to their attorneys\u2019 fees, but can ask for an award of punitive or exemplary damages as a punishment, if the fraud was committed knowingly, intentionally, or with malice.\u00a0 In Texas, there are other state laws that allow for different claims based on false representations.<\/p>\n

Breach Of Fiduciary Duty<\/h3>\n

Certain individuals owe fiduciary duties to others.\u00a0 These duties can be based on statements of law and by circumstance (i.e. a relationship built on trust).\u00a0 If a fiduciary relationship exists, the fiduciary owes duties of not self-dealing, to deal fairly and honestly, good faith and loyalty, full disclosure and candor, and to act with strict integrity.\u00a0 In a business, directors, officers, and partners owe each other some or all of the fiduciary duties.\u00a0 To establish breach of a fiduciary duty, a plaintiff would need to prove that a fiduciary relationship exists, that the defendant violated one of the duties, and that the violation caused harm to the plaintiff.\u00a0 Common fiduciary relationships include:\u00a0 attorney-client; holder of a durable power of attorney; trustee \u2013 beneficiary; business partners to each other; officers \u2013 company (shareholders); and employee \u2013 employer (in certain situations).\u00a0 A common fiduciary situation arises when one business partner commits the company to a transaction that benefits another company owned by the same business partner, without disclosing the dual ownership, the partner may have breached their fiduciary duty to their other partners.<\/p>\n

Partnership Disputes<\/h3>\n

A business partnership can be like a family or a marriage, as long as everyone is happy and healthy, it flourishes and thrives.\u00a0 But sometimes, when adversity strikes, partners can blame one another, have different ideas of how to move forward, or not to move forward at all.\u00a0 Unlike family, business partners, even friends, may not have the necessary connections to weather a storm.\u00a0 Problems can also arise when one partner is breaching their fiduciary duties and the other partner discovers the bad acts.\u00a0 When this happens, the partners need to find a way to \u201cdivorce.\u201d\u00a0 If the business was formed correctly, the company will have either a company agreement or bylaws that control how the split up should happen.\u00a0 Hopefully, the partners also entered into a buy-sell agreement that gives clear direction on the conclusion of the relationship.\u00a0 This agreement provides that one partner can buy out the other partner, and how to value the ownership and terms for purchase.\u00a0 If there is no such agreement, the partners can file suit to have the Court determine how to split up the company.\u00a0 These disputes are typically very expensive and involve multiple expert witnesses to address the value of the company, and how to distribute the business.\u00a0 Ultimately, such a dispute can lead to the dissolution of the company and both partners losing in the end.\u00a0 Even if you are in business with family or your best friend, following through with documents that control such possibilities will protect the partners from a destructive mess.<\/p>\n

Why Do You Need a Litigation Lawyer for Your Business Disputes?<\/h2>\n

Business litigation<\/a> and\/or disputes can be complicated and can implicate many Texas laws.\u00a0 It is important to work with a qualified attorney to properly set up your business relationships, enter into contractual relationships, to understand fiduciary duties owed to others, and if necessary to guide you through a complicated litigation process.\u00a0 A business litigator can help you determine the proper court to file, the best claims to bring, and then work towards a full resolution or a final trial.<\/p>\n

If you are in need of a business litigation attorney<\/a> in the Dallas or Lewisville area, fill out our contact us form<\/a> online for a free assessment or call (972) 436-9300 for a consultation.<\/p>\n","protected":false},"excerpt":{"rendered":"

Businesses of all sizes can face different types of disputes, and these disputes can end up as business litigation if the disputes are not resolved. Business litigation can be a lawsuit between two businesses (i.e. vendor and customer), a customer and a business, employee and employer, or even between business partners. Typically, business disputes revolve […]<\/p>\n","protected":false},"author":9,"featured_media":12137,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[5],"tags":[1083],"class_list":{"0":"post-12136","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business-law","8":"tag-business"},"yoast_head":"\nUnderstanding the Most Common Types of Business Litigation | Hammerle<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/hammerle.com\/legaltalk\/business-law\/common-types-of-business-litigation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Understanding the Most Common Types of Business Litigation | Hammerle\" \/>\n<meta property=\"og:description\" content=\"Businesses of all sizes can face different types of disputes, and these disputes can end up as business litigation if the disputes are not resolved. 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