What Are The Common Causes Of Business Litigation?

Business litigation is a major feature of American life where commerce and law collide. Companies sue each other for a variety of reasons. Regardless of whether your organization is a potential plaintiff or defendant in such a matter, you should understand the common causes of litigation.

Contract Breach

The contract is a central feature of business law. Unsurprisingly, contract breaches are among the most common causes of litigation involving companies. A breach happens when one party fails to deliver on its obligations under a contract.

Suppose Company A agreed to pay Company B $100,000 for 10,000 units of high-quality widgets. Presumably, the two companies' attorneys set down terms regarding the amount of money, number of units, quality controls, and transfer methods. A failure on any of these fronts could cause one of the two parties to claim a breach and bring in a business litigation lawyer. Likewise, there's a good chance the defendant would countersue after the plaintiff stopped paying or delivering.


Everybody wants to attract business. Unfortunately, this means that some companies will misrepresent their circumstances to make deals. Misrepresentation happens when one party knowingly provides false information.

Imagine a scenario where a company claimed that it had more assets than it did. This company had proposed purchasing an intellectual license from another firm in exchange for equity. The firm getting the equity might find out that the assets aren't really as numerous or valuable as represented. Consequently, the firm seeks compensation for the difference along with penalties and the termination of the contract.

Construction and Property Disputes

Corporations often need to purchase or sell properties, and one of the parties to the deal usually wants to use or develop the properties. Construction and real estate disputes are ripe for business litigation because there are numerous parties and steps involved. Buyers and sellers sue over the contract terms, processes, and representations. Customers sue construction companies for not following plans. Businesses sue governments over restrictions, and governments sue businesses for violations.

Breach of Fiduciary Duties

Depending on the nature of an arrangement, one company may have a fiduciary duty to another. For example, many accounting and investment firms are fiduciaries. What happens if the fiduciary is negligent in handling the client company's funds? In keeping with American tradition, the wronged company might hire a business litigation attorney and sue. A settlement or court judgment could make the plaintiff whole on their losses.

Contact a business litigation attorney for more information.