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Major Causes of Business Litigation — Part 1

On Behalf of | Dec 13, 2014 | Business Litigation

Buffington Law Firm’s business litigation attorneys are experienced in handling business disputes in Federal and State courts as well as various arbitration forums. In this series of articles we will discuss some of the common causes of business disputes that lead to litigation. Our hope is that this series will help our readers avoid some of the pitfalls that often lead to breach of contract disputes.

We recommend that you also read our series on Pitfalls of Contract Drafting.

Far and away the most common root of a business dispute is the lack of a well-drafted contract between the parties. One of the most common errors that people make is to be overly ambitious as to exactly what one or both parties will be obligated to do. As one Judge commented at a recent trial in which the Firm engaged, too many contracts are “aspirational” – they simply set the performance bar for one or the other parties too high. When entering into a contract, we cannot overemphasize the importance of each party realistically examining whether or not the party can really expect to carry out the obligations that the contract requires. Put simply “stuff happens” and it is important that a contract takes this into account and leaves some “aw shucks” room. Too often contracts set performance levels that assume that everything will go perfectly. This, of course, rarely happens in the real world.

At the time parties initially enter into a contract, typically there is a “feel good” atmosphere between them – often both sides are optimistic and excited about the agreement. However, as time goes by if one side is failing to meet the letter of the contract, all too often recriminations begin, and the other side sues. There is simply no more common scenario in business litigation. It is extremely important when entering into a contract not to commit to a problematic level of performance. Ensure that performance benchmarks such as commitments as to quantities shipped, shipping date commitments, completion dates, and the like, are truly realistic. Put simply, it is far better to modestly under commit relative to performance than to overcommit.

Often one party assumes that if there are difficulties in performance, that the other side will be happy to adjust and amend the contract to account for this. Sometimes this even happens. But there are tens of thousands of lawyers out there who make good livings litigating just these sorts of disputes. Litigation is a common outcome of this scenario.

One of the most common causes of an unrealistic contract, relative to the expectations that it commits one party to, is allowing the other side’s lawyer to unilaterally draft the contract. Often one side makes the magnanimous offer to “have my lawyer draft something up for us.” Make no mistake: that party’s lawyer is looking out for his or her client only-not for the other side. Buffington Law Firm always recommends that you should have your own attorney review any significant contract that you sign. There is no cheaper form of insurance. We cannot overemphasize how common it is for this situation to result in a ridiculously lopsided contract favoring the side whose attorney crafted the agreement. Attorneys are masters at putting hidden minefields in contracts that favor their clients. Even experienced businesspeople can fall into this trap.

If you are involved in a breach of contract dispute, we invite you to call our Firm for a free legal consultation. You will speak at no charge and with no obligation to one of our experienced business litigation breach of contract attorneys to discuss your case.