Top 5 Mistakes Businesses Make That Lead to Litigation

As a business owner or executive, avoiding litigation is all about managing risk. The more you can do to mitigate your company’s risk, the less likely it is that your business will end up in court. This includes avoiding costly mistakes—including mistakes that business owners and executives make far too often. Learn more from an experienced Miami business dispute attorney at Gonzalez Law Offices, P.A.

5 All-Too-Common Mistakes That Can Result in Business Litigation

Several mistakes can significantly increase the risk of facing a business dispute that leads to litigation. This includes not only mistakes that can lead to claims against the business, but also mistakes that can leave the business’s owners or executives with no choice but to take legal action. Here are five all-too-common examples:

1. Failing to Secure Necessary Contractual Protections

One of the most common business mistakes that leads to litigation is failing to secure necessary contractual protections. With strong contractual protections in place, businesses can often (though not always) resolve disputes without the need to go to court. For example, if a contract stipulates that a breach entitles the non-breaching party to specific remedies (i.e., liquidated damages or termination of the contract), then there may be very little (if any) over which to litigate.

On the other hand, if the contract does not include necessary protections for the non-breaching party, this leaves the question of what constitutes an appropriate remedy unanswered. In this scenario, the parties may be able to negotiate a mutually agreeable resolution, but if they can’t, then litigation may be the only viable solution.

2. Relying on Generic or Ambiguous Contract Language

Relying on generic or ambiguous contract language can also significantly increase the likelihood of litigation in the event of a business dispute. If a contract’s language is ambiguous—or if it is too generic to provide guidance on the specific issue at hand—this can be just as problematic as having no contract language at all. If the parties disagree about what the contract’s language means (or is supposed to mean), this can lead to litigation as well.

This is one reason, among many, why custom-tailored contract language and careful contract negotiations are critical. In many cases, generic or ambiguous contract language can raise more questions than it answers, and this can make litigation far more likely in the event of a contentious dispute.

3. Overlooking (or Ignoring) Key Contract Terms

When performing under a business contract, it is essential to comply with all applicable terms and conditions. Overlooking (or ignoring) a business’s contractual obligations can lead to defaults—which can in turn lead to litigation.

While complying with some contracts is fairly straightforward, in many cases, businesses will need to carefully manage contractual compliance throughout the lifecycle of a commercial relationship. If a business lacks the necessary internal controls and procedures to ensure compliance, it is far more likely to make mistakes that could—and should—have been avoided.

For example, let’s consider a construction contract that establishes multiple deadlines, includes specifications for multiple types of materials, and includes various inspection and other quality control requirements. If the value of the contract is substantial, a violation of any of these requirements has the potential to lead to litigation.

In this scenario, the contractor should take steps to ensure that it is prepared to meet each of these requirements as it comes due. If it doesn’t, any oversights—even if inadvertent—could prove to be very costly.

4. Violating Statutory or Common Law Restrictions on Business Practices

While many business disputes involve contractual issues, statutory and common law violations can lead to high-stakes litigation as well. These include (but are no means limited to):

Antitrust violations
Fraud
Tortious interference with business relations
Violations of fiduciary duties
Violations of third parties’ intellectual property (IP) rights

In cases involving statutory and common law violations, the remedies that are available depend on the specific circumstances involved. Compensatory damages and injunctive relief are two of the most common examples, and unless the party that made a mistake is prepared to settle, it will need to be prepared to fight to avoid these remedies in court.

5. Ignoring Issues that Could Have Been Resolved Without Litigation

Even when businesses make mistakes, they will often be able to avoid litigation with a proactive approach to the situation at hand. As a result, ignoring an issue that could—and should—have been resolved without litigation can prove to be a very costly mistake as well.

While business owners and executives are often hesitant to get a Miami business dispute attorney involved “too soon,” the reality is that promptly engaging an attorney can be a key step toward avoiding litigation in many cases. At the very least, an experienced attorney will be able to help you understand the risks at hand and make informed decisions with your business’s long-term best interests in mind.

What if It’s Already Too Late to Avoid a Costly Mistake?

Avoiding these mistakes (among others) is one of the best ways for companies to mitigate their risk of facing litigation. But, what if it’s already too late?

Here, too, the solution depends on the circumstances at hand. In some cases, it may be possible to negotiate (or renegotiate) a contract that includes adequate protections. In others, it may be possible to negotiate a settlement that allows the parties to move on. In others still, litigation may be the only option—and, when this is the case, an informed, strategic and proactive approach is essential to achieving a favorable resolution as cost-effectively as possible.

Request a Call with a Miami Business Dispute Attorney at Gonzalez Law Offices, P.A.

If you are facing a business dispute that has the potential to lead to litigation in Florida, we encourage you to contact us for more information. To request a call with an experienced Miami business dispute attorney at Gonzalez Law Offices, P.A., please call 305-676-6677 or tell us how we can get in touch online today.