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Business Management Review | Tuesday, December 10, 2024
Businesses of all sizes may face a variety of disputes that, if not properly managed, can develop into business litigation. This article discusses some of the most common types of business litigation.
Fremont, CA: Various businesses, regardless of their size, may encounter a range of disputes, which can escalate into business litigation if not adequately addressed. Business litigation may involve legal action between two companies, such as a vendor and a customer, a customer and a business, an employee and an employer, or even among business partners. Generally, these disputes are centered around contractual agreements or business relationships, where one or both parties seek financial compensation due to a breach of performance. Business disputes may also pertain to intangible assets, including intellectual property like trademarks or patents.
Common Types of Business Litigation
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Breach of Contract:
The most prevalent form of business litigation involves breach of contract. In such cases, the involved parties have entered into a contract, which may be written or oral, and one party does not fulfill their obligations. To substantiate a breach of contract claim, the Plaintiff must show the presence of a valid contract, the other party's failure to perform, and the resulting harm from that failure. Non-performance may manifest as a failure to pay for goods or services rendered a failure to deliver a purchased item, a failure to adhere to delivery schedules, or a failure to comply with any significant term of the contract. Initially, a judge interprets the contract terms to ascertain the parties' responsibilities unless there is a contention that the terms are vague or ambiguous.
Fraud:
The presence of a contract typically governs the business relationship between the parties involved. Nonetheless, a party may engage in fraudulent conduct, which could give rise to an independent claim in a legal proceeding. To establish fraud, the Plaintiff must demonstrate that the opposing party made a significant false representation, that the Plaintiff relied on this misrepresentation to proceed with the transaction, and that this representation directly harmed the Plaintiff. Generally, proving fraud is more challenging than demonstrating a breach of contract. The misrepresentation must be material and consist of a factual statement rather than an opinion.
Breach of Fiduciary Duty:
Specific individuals are obligated to fulfill fiduciary duties towards others. These obligations may arise from legal statutes or from circumstances that establish a relationship founded on trust. When a fiduciary relationship is present, the fiduciary must adhere to principles such as refraining from self-dealing, engaging in fair and honest dealings, demonstrating good faith and loyalty, providing full disclosure and transparency, and maintaining strict integrity. Within a business context, directors, officers, and partners are expected to uphold some or all of these fiduciary duties towards one another. To create a violation of fiduciary duty, a plaintiff must prove the occurrence of a fiduciary relationship, show that the defendant violated one of the duties, and prove that this violation harmed the Plaintiff.
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