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When might companies turn to litigation?

 

Most corporations and their customers, vendors and contractors sign contracts when they go into business. They do so to protect their interests in case something goes wrong and a dispute arises.

Contracts have terms and conditions in them. They outline each parties’ obligations as well as the consequences for breaching their agreement. Many contracts call for mediation or arbitration as the first step if a dispute arises that parties can’t resolve amicably without a third party’s intervention. Many businesses want to keep their business out of the news and therefore opt to resolve their differences via mediation or arbitration.

You may wonder what happens if mediation or arbitration doesn’t resolve the dispute. There are instances in which neither side wants to budge, and thus litigation becomes essential, including in breach of contract matters. That’s when one of the parties may pursue litigation.

What are some common corporate disputes that result in litigation?

The contracted party offering a good or service counts on their customer or vendor following through in paying or providing what they promised. Any violation of such an agreement often results in a company requesting that a judge enforce the contract and award damages to reimburse the nonbreaching party of its losses.

Non-compete or non-disclosure agreements protect your company from an employee undergoing training then going to work for a competitor or from gaining access to confidential information then spreading it to others. A judge may need to be called in to determine whether an agreement was overly restrictive and, if not, to enforce penalties for any breach that occurred.

It’s also common for the following unresolved matters to result in litigation:

  • Business partner and shareholders disputes
  • Intellectual property matters
  • Construction defect issues
  • Termination of leases
  • Employment discrimination matters

These are only some of the many issues that businesses may not be able to resolve amicably, resulting in companies needing to pursue litigation.

Is litigation the next step you should take?

If your company is facing litigation, many times, settlements can be arrived at outside of court through alternative dispute resolution or mediation. Litigation should only be seen as the last resort. You may want to have an attorney review your case and go over your legal options with you.