Why Do Business Disputes Occur?

In businesses, disputes are bound to occur no matter how much you try to stay away from trouble. Instead of pretending that everything is going fine, you must prepare yourselves to resolve disputes in the best ways possible. One way of avoiding disputes is taking preventative measures. In order to take preventative measures, it is first important to understand why disputes even occur. 

When you do not know the underlying cause of the problem, you cannot find an effective solution. Meanwhile, if you are already facing major business problems and are considering legal action, hire a Lawyer today. 

Common causes of business disputes

  • Breach of contract. 

As a business owner, you may have certain business partners or shareholders. Business relationships between two parties are often bounded by contracts that lay the terms and conditions of their relationship. 

If any of the parties involved in the contract violates any of the terms or does not uphold the obligations in the agreement, you can sue them for a breach of contract. You can even collect money from the other party for conducting the breach. Whether you receive the amount will depend on whether you incurred any financial losses. 

  • Shareholder disputes. 

Disagreements with shareholders can sometimes turn into ugly fights and have the ability to take down an entire company. Disagreements can happen over various topics, including: 

  • Breach of fiduciary duties
  • Financing issues and debts
  • Conflict of interest
  • Long-term company strategy
  • Misuse of company funds or distributions
  • Failure to capitalize the company
  • Management and hiring decisions

Sometimes, you and your partners have the same dreams and visions when you start a venture together. However, things can change as your organization grows. You or them can have a change of heart or want to try out new ideas. If one of the parties thinks that the other’s ideas are harmful to the company, that is when things start going downhill. 

  • Employment litigation. 

Employment litigation is also a very common form of business dispute. It occurs when an employer commits misconduct toward their employees. If the employee feels that their rights were violated, they can take legal action against you. Such disputes are often complicated, and you would need a powerful attorney on your side. 

  • Gross negligence. 

Although it is not expected for every professional you hire to be perfect, it is important that they do not cause harm to your company. Gross negligence happens when you ask someone for advice, and they do not act in good faith or live up to the industry’s standards. 

This commonly happens with engineers, management consultants, accountants, surveyors, or any hired third party. You have a case if their actions have caused a breach of duty and you suffered material losses.