Common Causes of Commercial Disputes in Texas
Running a business presents immense opportunities for growth and success. However, business operations often come with disagreements and conflicts. When these issues arise, they can disrupt progress, damage relationships, and threaten your bottom line. Understanding the common causes of commercial disputes is the first step toward preventing them.
Seeking prompt legal assistance for commercial disputes is essential, as it enables you and your business to protect your interests, mitigate financial losses, and find a resolution before the conflict escalates into litigation.
At The Parzivand Law Firm, PLLC, Attorney Hessam Parzivand serves as your steadfast legal ally, bringing a unique perspective to business disputes shaped by his background in human resources. Whether you need general legal advice or representation in a commercial dispute, reach out today. The firm serves Fort Bend County, Texas, including Sugar Land and Stafford.
What is a Commercial Dispute?
A commercial dispute is any disagreement or conflict that arises between businesses or between a company and its partners, clients, or vendors. These conflicts typically revolve around business transactions, agreements, or operations. While some disputes can be settled through simple negotiation, others require more formal processes, such as mediation, arbitration, or litigation, to reach a resolution.
These disagreements can stem from a wide range of issues, from a simple misunderstanding over an invoice to a complicated breakdown of a multi-year partnership. In such cases, the financial and reputational stakes can be high, necessitating a clear and strategic approach.
Frequent Sources of Business Disagreements
Commercial disputes can originate from nearly any aspect of business operations. However, some issues tend to appear more frequently than others. Recognizing these common triggers can help business owners implement better practices to avoid them.
Breach of Contract
At the heart of most business relationships is a contract. Whether it is a sales agreement, a service contract, a lease, or a partnership agreement, these documents outline the obligations and expectations of all parties involved. A breach of contract occurs when one party fails to fulfill its duties as specified in the agreement. This can happen in several ways:
Non-payment: A client fails to pay for goods or services that have been delivered.
Failure to deliver: A supplier fails to provide the goods or services as promised.
Substandard performance: The work completed does not meet the quality standards outlined in the contract.
Missed deadlines: A party fails to meet a timeline specified in the agreement.
Contract disputes are one of the most common types of commercial litigation. They often arise from poorly written agreements, ambiguous terms, or a simple failure to communicate.
Partnership and Shareholder Disputes
When you start a business with a partner or bring on shareholders, you create a complex relationship that combines your financial interests with personal dynamics. Disputes among business owners can be particularly damaging because they strike at the core of the company's leadership and direction. Some common causes include:
Disagreements over the company's strategic direction.
Conflicts regarding the roles and responsibilities of each partner.
Issues with profit distribution or financial management.
A partner acting against the company's best interests (breach of fiduciary duty).
Without a clear partnership or shareholder agreement that specifies how to handle disagreements, these disputes can quickly spiral, potentially leading to litigation and the dissolution of the business.
Real Estate and Property Disputes
For many businesses, commercial real estate is a significant asset and a major operational cost. Disputes related to property can disrupt business activities and lead to substantial financial strain. These can involve disagreements over commercial leases, such as conflicts regarding maintenance responsibilities, property use, or renewal terms.
Purchase and sale agreements can also be a source of conflict, particularly if issues such as undisclosed property defects or zoning problems arise.
Intellectual Property Conflicts
In our modern economy, intellectual property (IP) is often a company's most valuable asset. IP includes trademarks, copyrights, patents, and trade secrets. Disputes in this area can involve accusations of trademark infringement, where one company uses a name or logo that is confusingly similar to another's.
Copyright issues can arise from the unauthorized use of written content, images, or software. Protecting these assets is fundamental to maintaining a competitive advantage.
Employment-Related Issues
Disagreements between an employer and an employee can also fall under the umbrella of commercial disputes. These may include conflicts over employment contracts, non-compete agreements, or allegations of trade secret theft by a former employee. While many employment issues are handled through specific labor laws, the business-to-business implications (such as a former employee taking clients to a new company) can lead to commercial litigation.
Texas Laws Governing Commercial Disputes
Texas has robust laws in place for resolving business disagreements. The Texas Business and Commerce Code is a primary source of law that governs many commercial transactions. For instance, it includes the Uniform Commercial Code (UCC), which provides standardized rules for the sale of goods, leases, and other commercial transactions.
This helps create predictability in business transactions across the state. However, when it comes to breach of contract, Texas law requires the plaintiff to prove several key elements:
The existence of a valid and enforceable contract.
The plaintiff performed or was prepared to perform their part of the agreement.
The defendant breached the contract by failing to fulfill its obligations.
The plaintiff suffered damages as a direct result of the breach.
Texas law also recognizes the concept of "breach of fiduciary duty." This applies to relationships where one party has a legal obligation to act in the best interest of another, such as between business partners. A partner who misuses company funds or enters into a secret deal that harms the business may be held liable.
For resolving disputes, Texas courts encourage methods like mediation before proceeding to a full trial. Mediation is a confidential process where a neutral third party helps the disputing parties negotiate a settlement. It is often faster and less expensive than traditional litigation.
Business Law Attorney Serving Stafford, Texas
With offices in Houston and Stafford, Texas, The Parzivand Law Firm, PLLC, Attorney Hessam Parzivand strives to connect with clients and guide them through commercial legal disputes. His background in human resources makes him approachable and easy to communicate with, whether you meet in person, speak over the phone, or correspond via email.
Through his firm, he offers cost-effective solutions tailored to your needs to support you and your business at every stage of your case. If you need help with commercial disputes, such as breach of contract cases, or other business law matters in Stafford, Sugar Land, and throughout Fort Bend County, Texas, contact The Parzivand Law Firm today.