The Three Most Common Types of Small Business Litigation

Mar 27, 2019 | Commercial Litigation

small business litigation

Small business litigation often revolves around similar types of cases.

Before starting a business, individuals should understand that small business litigation is very possible. It’s something for which they need to account and prepare. Most lawsuits involving a small business usually deal with the following three types of legal disputes.

Breach of Contract

Breach of contract is probably the most common type of small business legal dispute. It can occur anywhere, at any time and between anyone. Breach of contract cases can include any of the following types of legal disagreements:

  • Breach of an employment contract, such as a nondisclosure, noncompete or severance agreement.
  • Contracts with customers, especially those involving construction.
  • A landlord-tenant dispute over a lease.
  • Purchase orders.
  • Partnership agreements.

These are all examples of breach of contract lawsuits. Their legal basis originates with an actual contract or someone claiming that a contract exists. But anyone can see that even though contract legal principles apply, the underlying facts and circumstances can range wildly.

For example, with a purchase order, the contract could be a legal document that no one ever reads. Nobody knows what the terms of the contact are. Only when there is a problem with an order, does someone finally read the contract! On the flipside, you have can partnership agreements that take months of negotiating to prepare, where the individuals subject to the contract know each term and provision like the back of their hand. Additionally, in a partnership agreement, the parties to the contract will usually know each other very well, unlike with a purchase order.

Dispute Between Employer and Employee

Another common type of lawsuit that small business owners and workers find themselves in have to do with employment law issues. Examples include wrongful termination, harassment, and discrimination.

These can be particularly hard-fought cases because they are very personal and the person bringing the lawsuit may feel like the business owner or other employee mistreated them. This means the underlying facts of these lawsuits can be very painful, embarrassing or otherwise difficult to handle.

Then there’s the fact that a lot of employment disputes come down to a battle of words where one party says the other party did or didn’t do a particular thing. Therefore, the believability of everyone involved can make or break the case. Should the case actually get to trial, anything can happen.

Intellectual Property Rights

A lot of small businesses take years to create or rely on a very precious piece of information for success. Customer lists and trade secrets are good examples. The creator of a small business often starts with just an idea but can turn that idea into a profitable business that enjoys a lot of success. However, that business lives or dies based on that list of customers or trade secret (like a secret formula or a special piece of computer code in software).

So when a former employee or partner leaves the business but takes some customers or the secret formula with them, that can sometimes mean the death of the original business. On the other hand, the person leaving can’t start their own business without the information they took. So it’s no wonder intellectual property rights lawsuits are very important to small business owners.

Schedule your complimentary consultation with the Wilbanks Law Firm, P.C. about small business litigation by calling (706) 335-2355 now.