Business litigation covers a wide span of legal claims. While the phrase “business litigation” conjures images of competing CEOs in boardrooms surrounded by their lackeys threatening to sue each other’s company into oblivion, this isn’t always the case. Business litigation involves everyday disputes that arise when companies fail to provide the services for which they were hired or have otherwise failed to comply with the terms of their contract. Business disputes affect real people like franchisees who scraped together their hard-earned money to invest in a business, which is being taken advantage of by the franchiser. Other claims could involve collecting money from companies who refuse to pay for services rendered or one company engaging in the unfair competition, which damages the business of another firm.
If your company, partnership, LLP, LLC, or sole proprietorship, or you or a colleague have suffered severe damages due to the actions of a business entity, the nationally renowned law firm, Parker Waichman LLP, can help. Parker Waichman LLP has decades of experience successfully litigating business disputes. The business litigation lawyers at Parker Waichman LLP understand how to thoroughly investigate business disputes and examine complaints that prevent businesses from growing and earning what is rightfully theirs. So if you’re searching for a commercial litigation lawyer in Long Island, New York, or New Jersey, be sure to contact us right away.
Common Business Litigation Disputes
As briefly referenced above, the legal discipline of business litigation encompasses a variety of disputes which commonly arise between companies or other business entities. Individuals may also bring claims against businesses which could be defined as business litigation. The following list of disputes is typically defined as business litigation. The list is not exhaustive, but is designed to define a business dispute broadly.
- Contract disputes alleging breach of contract
- Contract disputes involving the failure to pay money commonly referred to as “collection actions”
- Defective goods and services
- Unjust or unfair business practices, including fraud and misrepresentation
- Intentional interference with contractual relationships and business relationships
- Franchise disputes
- Legal actions were taken by shareholders in closely held companies with only a few shareholders or shareholder derivative actions involving publicly traded corporations.
Breach of Contract Actions
It stands to reason that there can be no breach of contract action if there is no enforceable contract at the outset. Therefore, it is essential to define a contract. A contract is more than a piece of paper, the title of which identifies the writing as a “contract.” The formation of an agreement or legally binding contract requires a meeting of the minds, where two or more parties agree on the essential elements of the business arrangement. This is sometimes referred to as the exchange of mutual promises.
For example, XYZ, Inc. promises on November 1 to manufacture 50,000 widgets for A Corp. by May 1. To complete the deal, A Corp. agrees to pay XYZ, Inc. in U.S. currency for the widgets if they conform to the specifications A Corp. requires. As you can see, contract formalities need more than a handshake and a gentlemen’s agreement to be enforceable.
To complete the contract, there must be “consideration” exchanged between the parties. Consideration essentially determines the value of the contract and is usually money for goods. Consideration can take many forms. For instance, consideration could be services rendered in exchange for the production of goods (this is frequently referred to as a “like-kind exchange”) or goods can be traded for other products or stock. It does not matter what the consideration is as long as the parties agree and a court will not inquire into the sufficiency of the consideration if the parties do agree unless the contract is apparently a sham. So, to form a contract, three elements, or conditions, must be satisfied: offer, offer acceptance, and consideration. That is all that is required to form a contract, assuming the lawfulness of the terms and the subject matter of the contract.
To enforce the contract, the agreement itself must be memorialized between the parties. That means the contract must be in writing to satisfy the Statute of Frauds. The Statute of Frauds harkens back to English law which says that the party against whom the contract is to be enforced must have signed the agreement, otherwise the contract cannot be enforced.
The Statute of Frauds says that if you are serious enough about the deal, then you will do something to show how much it means to you and the other party. That objective manifestation of intent is evidenced by signing the contract documents. While the original Statute of Frauds is an arcane bit of legal history, it remains valid today. The case law and legislation have expanded the meaning of the Statute of Frauds to include the exchange of emails, faxes, text messages, and the like to satisfy the command of the Statute of Frauds.
So, if one party fails to perform its contractual obligation, then the party is said to be in breach of that contract. The party who is damaged by the breach can sue in court to collect the money owed.
The measures of damages are:
- The contract price
- The price difference between what you ordered and what you received
- The replacement value
- Incidental Damages
Breach of contract actions for goods is governed by a nuanced set of rules known as the Uniform Commercial Code (UCC). Specifically, Article 2 of the UCC contains a comprehensive set of rules about contract formation, the terms of contracts, and damages. Article 2 only applies to the sales of goods.
There are other breaches of contract actions in business litigation. For instance, some employment contracts are in writing and are subject to the common law rules of contract formation and breach. However, highly specialized contracts involving software and computer programs are construed by the Uniform Law of Computer Information Transactions Act, also known as UCITA.
Commercial collection is a particular breach of contract action. Failing to pay the price due on the contract is a breach of contract. This action arises when an organization or individual refuses or fails to pay for goods or services for which they agreed to pay. Collecting delinquent payments is critical to keeping a business alive. Businesses, large and small alike, cannot stay in business if their customers do not pay them.
Proving that the delinquent company owes money is not difficult. The plaintiff merely needs to demonstrate that they provided services or goods that complied with their obligation under the contract and they were not paid by the entity to which the goods or services were provided. The plaintiff must show that the products or services were tendered timely.
The business entity against whom the complaint is made has an opportunity to defend. The company might claim that the goods or services were deficient and not worth the contract price. The defendant can also claim that they had to go out and spend money to fix the problem. That is where an experienced and successful business litigation attorney will protect your rights. They will know how to counter those arguments for example, by acquiring evidence that the defendant did not complain about the goods or services when the plaintiff tendered them. There could be evidence in emails or other communications that suggest the defendant agreed to pay.
Parker Waichman’s business litigation attorneys have experienced significant success securing payment for their clients in collection matters. They understand how to ensure that their clients get paid by filing to freeze bank accounts and collecting on judgments after the trial.
Lawsuits over Defective Goods
Many business litigation lawsuits emerge over defective goods. The UCC defines defective goods as delivering, or tendering, goods that do not adhere to the contract specifications is another form of breach of contract action. Under the UCC, the buyer or purchaser of goods bears the obligation to pay for the goods. However, if the products do not comply with the expectations of the buyer as established by the contract terms, then the buyer has remedies to fix the problem.
Defective goods in this context does not mean that they have or will injure someone-although it could. Generally, under the UCC, the term defective means that the widget ordered by the buyer does not match the contract term. An example might be a restaurant chain orders 20,000 serrated edge knives for distribution among the restaurants in the chain. But, the knife manufacturer tenders 20,000 butter knives instead. Failing to comply with the order results in a breach of contract.
The UCC tries to prevent contract disputes and facilitates good business practices between buyers and sellers. Consequently, the buyer has a right to inspect the goods before delivery. If the buyer determines that the goods do not conform to the contract, then the buyer has the right to reject them. This is called the “perfect tender rule” under the UCC; it is not enough to “substantially comply” with the contract requirements. Application of the perfect tender rule triggers the right on behalf of the seller to cure the defective goods. The seller can take the goods back and fix the problem. Therefore, in the simple hypothetical knife dispute above, the seller can take back the butter knives and fulfill the order by delivering the knives with serrated edges.
But, the seller has a right to reject the goods. This must be done within a “reasonable time” after delivery. The buyer also has the opportunity to revoke acceptance if the buyer accepted the goods based on the seller’s representation that they would fix, or cure, the problem. The buyer can accept the non-conforming goods, and if so, they must pay the fair market value of them. The buyer has the right to seek damages if they go out and purchase goods because the seller did not tender the correct goods.
It is essential to note that each state’s laws vary slightly. The UCC is a proposed uniform law, and almost every state has adopted it in one form or another. However, some legislatures might have changed the provisions slightly, and case decisions from appellate courts also help construe each state’s version of the UCC. Parker Waichman’s business litigation lawyers have experience representing clients in numerous states around the country and consequently, have learned the nuances of each state’s version of Article 2 of the UCC.
Businesses may not commit any acts that cause an economic injury to other business entities. Economic harm in this instance is not a breach of contract. Instead, economic injury in the context of unfair competition is an injury to a company’s bottom line.
Examples of unfair competition are:
- Stealing trade secrets
- Stealing proprietary information, such as customer rosters, customer pricing, and delivery schedules
- Infringement of trademarks, service marks, and patents
- Defaming the company in trade negotiations
All states have their own unique set of laws involving unfair competition. Additionally, some federal laws might apply as well depending on the particular situation.
Every state has a distinctive definition of trade secret. Information maintained by a business is a trade secret when:
- The company takes steps to protect the information because it believes that it must remain secret
- There must be some economic value in the information
- Dissemination of the information to the public would injure the business
- The information is not known or reasonably determined by other entities
Many companies take great pains to keep the information a trade secret. Trade secrets can be sales schemes or processes, manufacturing techniques, recipes, computer code, or project under development. However, once the information has been disclosed to outsiders, then the information is no longer protected by trade secret law.
Some businesses take great pains to maintain information as a trade secret. They might require employees and independent contractors to sign confidentiality agreements and non-disclosure agreements. Additionally, they might be asked to agree to non-compete clauses in their employment contracts. Non-complete clauses are void in some states, and if they are lawful, they must be narrowly drawn, so the employee is not overly restrained from finding alternate employment. Executives might also have this restriction in their employment contract.
Trademark and Patent Infringement
Trademark and patents are two different methods of protecting a company’s or an individual’s intellectual property. A trademark is registered with the (USPTO) United States Patent and Trademark Office. Similarly, a patent is registered with the United States Patent and Trademark Office. Use of a patent or trademark without receiving authority from the patent or trademark holder will lead to civil liability.
Not every infringement of a patent or trademark results in an award of damages. Typically, an entity aggrieved by the unauthorized use of trademarked or patented material will issue a “Cease and Desist” letter. This is a letter, which puts the offending company on notice that they are using patented or trademarked materials. A person or company aggrieved by another company due to use of a protected item can sue the offending entity in court and ask the judge to order the offending company to stop using the patented or trademarked article and passing it off on their own. This is known as injunctive relief.
The plaintiff in a trademark infringement action must show that the company registered the trademark or is using a mark that is so distinctive to the company that everyone else knows who owns it. The second component of proving trademark infringement is showing that there could be confusion between the rightful owner of the trademark and the infringing party.
The plaintiff could win monetary damages. The court could award the plaintiff any profit or revenue that the defendant made from selling items with the infringed trademark. Sometimes courts order the defendant to pay the costs of the action to the plaintiff. If the plaintiff proves that it registered the trademark with the U.S. Patent and Trademark Office, then the plaintiff can receive triple damages and attorneys’ fees as well.
In a patent infringement case, there are two elements the plaintiff must prove to be successful. The initial step involves showing that the claim is valid based on the written descriptions of the items in question. Secondly, the court will examine the items themselves to see if various elements of the inventions are similar. If so, then the plaintiff will be victorious.
In both patent infringement claims and trademark infringement claims, the litigation is very complex and lengthy. That is why your business needs business litigation lawyers such as those from Park Waichman LLP who have the experience, knowledge, and determination to achieve success on your behalf.
Unfair Trade and Fraudulent Business Practices
Each business has the responsibility to deal in a fair and honest manner with each other. That means issues like corporate espionage and raiding of employees is prohibited. Additionally, stealing trade secrets, illegal surveillance (like wiretapping), and computer hacking are incompatible with fair trade.
Similarly, fraudulent business practices are cognizable claims in court. Fraudulent business practices can be as overt as a person deceiving the plaintiff to do business. Another fraudulent ploy might be to knowingly sell a company defective goods. In either scenario, the plaintiff will have lost money.
When a third-party interferes with the advantageous relationship between entities, that is known as tortious interference with contractual relations. This claim arises typically when a company that is not a party to a contract insinuates itself between the two contracting parties, induces one side to break the contract, and causes the other to lose money. The interfering party must pay damages to the plaintiff in an amount that compensates the plaintiff for their loss. That might be the value of the contract plus any incidental costs associated with complying with the contract terms and the contract interference.
Franchisee Disputes with Franchisors
Franchising established brands and products is an excellent method of entering business for oneself. The franchise is an established brand with built-in marketing and name recognition. The arduous task of building a brand from scratch has been done for the franchisee by the franchisor. Many disputes arise between the parties in these matters. There can be complex contract issues such as the franchisor’s obligation to continue to grow the brand or whether the franchisee is stealing trade secrets or there is an issue with paying the franchise fee and applicable royalties. At any rate, there is the potential for complex litigation with these types of business relationships.
A shareholder is a person who pledges money to a company in exchange for a partial ownership interest in the business. That ownership interest is reflected in a share of stock. Corporations must do everything in their power to make the shareholders money by increasing the value of the company. When corporate executives fail to do so whether intentionally by engaging in fraud or theft, or by mismanagement, the shareholders could have a cause of action.
Shareholder derivative lawsuits are commonly filed when the shareholders lose money after the corporate entity takes some action. The shareholder sues as though the shareholder was the corporation. A corporation is a “legal fiction” because the law treats a corporation, which is merely a creature of statute, as though it was a real person. Since the corporation is not an actual person, a shareholder steps into that position by being a part owner of the company and sues the board of directors or the executives for mismanagement, self-dealing, improper use of authority and the like.
Statute of Limitations
Each cause of action discussed above has different statutes of limitations. The length of time a company or an individual has to file a claim before the statute runs depends on the state in which the case is to be filed. Parker Waichman LLP will help you determine what the applicable statute of limitations is for you to file your claim timely.
Frequently Asked Questions About Business Litigation
What Does it Mean to File litigation?
Litigation is simply a term that is used to refer to the legal proceedings that take place after a lawsuit has been filed. So to file litigation is just another way of saying that you are filing a civil lawsuit that will have to be settled with the courts.
What Does Litigation and Non-Litigation Mean?
Litigation is simply a way to describe in different terms a lawsuit or legal proceedings that take place within a court of law with respect to civil matters. Therefore, non-litigation would mean to settle any civil dispute without having to bring about a lawsuit or go to court over the matter.
Do All Lawyers Litigate?
No. Many matters are handled and subsequently settled outside of the courts and are therefore not considered litigation. In point of fact, most lawyers practicing within the U.S. never have to step into a courtroom and some do not handle litigation cases at all.
What is the Definition of Litigation Lawyer?
A lawyer is anyone accredited to practice law and represent a business or individual in legal matters. Whereas a litigation lawyer is a certain form of attorney that represents their client(s) in the courtroom and argues on their behalf. They are often referred to as “trial lawyers.”
What Does It Mean for a Lawyer to Work on Contingency?
A business contingency lawyer is an attorney who works on a contingency-fee basis. This means your lawyer agrees to take on the case in exchange for a portion of the amount awarded should you win. Often times this is one third of the damages recovered in the lawsuit. A contingency fee gives a lawyer more incentive to win your case since they don’t receive any financial compensation unless you win.
How Do You Find a Lawyer Who Will Work on Contingency?
There are many ways in which you can find a lawyer who is willing to work your case on a contingency fee basis. You can do a simple google search, contact the state bar association, ask friends or relatives who have worked with contingency business lawyers in the past, or use an online service to locate one.
Are Contingency Lawyers Considered to be Good?
Working with contingency business lawyers can be viewed as beneficial for a couple different reasons. First, you don’t owe a lawyer working on contingency anything unless they win the case and you are awarded compensation. Second, because they aren’t paid unless they win, they have extra incentive to work especially hard to get you the best results possible.
Can You Fire a Contingency Lawyer?
Yes, it is absolutely possible to fire a business contingency lawyer if for some reason you are unhappy or dissatisfied with the work that they are putting forward. However, doing so may harm the chances of winning your case if it proves difficult to find another lawyer to take over an ongoing lawsuit.
When Should I Hire an Employment Lawyer?
Harassment or discrimination, illegal termination, withheld benefits, or violation of state or federal laws are all signs that your employer is treating you unfairly or purposefully putting you in a position to fail. If any of these situations should happen to you, it may be time to contact an employment lawyer.
Parker Waichman for Your Business Litigation Case?
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Talk with One of Our Business Litigation Lawyers Today
Parker Waichman LLP will evaluate your claim in a free, no-obligation consultation. Contact our business litigation law firm today to learn more about how we can protect your business interests and recover the damages for your business litigation claim. Parker Waichman LLP’s business litigation lawyers have vast experience aggressively pursuing business entities who have caused a financial injury to another business.
Contact Parker Waichman LLP, a commercial litigation attorney in Long Island, New York, or New Jersey today by filling out our online form or by calling 1-800-YOURLAWYER (1-800-968-7529) if your business concern suffered economic injury.
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