Businessman Signing An Official Document

Main Causes of Business Contract Disputes

By David Hood
Partnership Chair

Business contracts are legally enforceable agreements between parties. Contracts protect you and your company from liability. They also reduce the risk of costly disputes and litigation. Our North Carolina business litigation attorneys assist business owners in business contract disputes.

Unfortunately, predicting every possible dispute that could arise in a business transaction or relationship is impossible. You cannot stop someone from filing a lawsuit even when you anticipate a potential problem. However, you can build a successful defense based on a well-drafted, legally enforceable business contract. 

Common Business Contract Disputes in North Carolina 

A party might dispute one or more terms in a business contract. Common reasons for business contract disputes include, but are not limited to:

  • Breach of Contract – A party fails to meet its obligations and duties outlined in the business contract. That could include lack of payment, failure to deliver services or goods, and missed deadlines.
  • Shareholder disputes, including allegations of conflict of interest and breach of fiduciary duties. It could also include failure to make required distributions or dividends and disputes related to transferring shares.
  • Breaches of confidentiality and non-disclosure clauses. This type of contract breach often occurs with trade secrets and intellectual property. 
  • Labor and employment disputes, including non-compete agreements and employment discrimination. It could also include wage and hour disputes and failure to perform job duties.
  • The business contract was poorly drafted. The lack of specific legal clauses or wording could open a contract to different interpretations.
  • Unclear language and errors in contracts can also lead to disputes when the parties believe they agreed to different terms and conditions. 
  • Disputes related to goods, services, and warranties. Warranties for goods and services could be implied or explicit. There could also be disputes related to the delivery of goods and services or the payment for them.

A contract sets forth the terms and conditions for an agreement between parties. It should also set forth how the dispute should be resolved and the controlling law for the contract. Some contracts contain provisions requiring the parties to submit to binding arbitration instead of litigation. Before you agree to the terms of a contract, talk to a business lawyer to ensure the contract protects your interests.

Steps You Should Take if You Have a Contract Dispute 

Handling a contract dispute effectively and successfully means being proactive. If the reason for the dispute was a misunderstanding, a company might be able to resolve the dispute by discussing the misunderstanding.

However, you should prepare for litigation while you hope to resolve the dispute through negotiations. Therefore, contact a business lawyer immediately to discuss the matter. Gather all documentation regarding the dispute for your lawyer to review. Also, write down a timeline with as much as you recall about the dispute and give the summary to your lawyer. 

Your attorney can advise whether you should continue meeting the contractual obligations. Even if you believe there is no merit to the dispute, you may need to continue meeting your contractual obligations. Failing to meet your obligations could result in breach of contract. What you do now and moving forward could significantly impact the outcome of the contract dispute. Therefore, it is best to seek legal advice immediately to avoid making a costly mistake. 

Contact Our North Carolina Business Attorneys for Help with Business Disputes

The best way to protect your interests and rights during a business contract dispute is to seek legal advice immediately. Our North Carolina business litigation attorneys are exceptional negotiators and skilled trial lawyers. Contact our law firm to schedule a consultation to discuss your situation with a business lawyer.

About the Author
David W. Hood, Partnership Chair of the Firm, is a trial attorney in a wide-ranging civil practice with over 200 jury trials to his credit. His concentrations include Business Disputes, Construction Law, Personal Injury and Collections. He is also a certified mediator, helping to settle cases pending in both state and federal court. He recently finished his term as President of the North Carolina Association of Defense Attorneys, the organization for lawyers representing business interests in civil litigation.