Civil litigation arises when there is a legal dispute between at least two parties that does not involve criminal claims. A subset of civil litigation is a commercial dispute or commercial litigation. The definition of commercial litigation is civil litigation between businesses, typically corporate entities. Given the current litigious landscape in California, many business owners have been or will be involved in a litigated commercial dispute, particularly those involving contracts, as they tend to be utilized for transactions of consequence.
One of the best ways to prevent a commercial dispute and litigation pertaining to a contract is to work with an experienced attorney when drafting and negotiating agreements. Business attorneys are capable of creating contracts with tailored wording and criteria that makes it less likely to result in problems down the road. Along with contractual business disputes, there are a number of other common types of commercial disputes.
Types of commercial disputes
Some of the other most common types of commercial disputes arise from commercial real estate leases (including ground leases), breach of fiduciary duty, and intellectual property, trademark and copyright infringement. The following are examples of the most common causes for dispute:
Breach of commercial real estate lease and/or ground lease: For most businesses, their working space is vital to the overall success. Therefore, their investment in commercial real estate is often one of their highest costs. Where an issue arises, it can make or break a business. Therefore, these types of issues are likely to lead to litigation if not resolved reasonably quickly.
Breach of Fiduciary Responsibility: Fiduciary responsibility refers to a relationship between entities or individuals involving trust or responsibility. An example of a fiduciary duty present in commercial settings includes the duty of loyalty owed by a member in a member-managed LLC to the LLC and the other members. When there is a breach of a fiduciary obligation, a breach of fiduciary claim may arise that leads to litigation.
Intellectual Property Infringement: As our world becomes increasingly dependent on technology, intellectual property rights are fundamental to the financial health and success of many businesses. Intellectual property infringement involves things like trademarks, copyrights, patents, trade secrets and confidential research and development information. Disputes occur when a company files a claim alleging that their intellectual property has been stolen or used without their permission.
Dispute resolution clauses
Once a commercial issue arises, the governing agreement should be carefully reviewed to determine the applicable venue and procedure for purposes of initiating a claim. In the commercial space, there are a number of different ways to go about resolving commercial disputes. Whenever required by the governing contract, filing a claim through the required Alternative Dispute Resolution (ADR) process is recommended, because filing in the wrong venue can lead to delays and unnecessary costs.
The two most popular forms of ADR regularly included in commercial agreements are mandatory mediation and arbitration. Both methods involve the parties meeting with a neutral third-party facilitator in an attempt to come up with a resolution that is acceptable to both sides. The main difference being that an arbitrator has the authority to make binding decisions about the resolution, whereas a mediator does not.
Whichever course of action your dispute requires, make sure you engage the help of a business lawyer such as Shawn Leo, an experienced business attorney in San Diego, to represent your interests. Please feel free to call the office to schedule a consultation to see how we can help you today.