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A Closer Look at Commercial Litigation

When you own a business, you know that you’ll need lawyers to assist you at various stages of the business. You’ll need a real estate lawyer to review your purchase or lease agreements of your premises. You’ll need a business lawyer to review your sales contracts and any vendor agreements. You’ll also want an employment lawyer assisting with your employment contracts to make sure that they’re properly protecting your business.

Yet when you run into trouble, you’ll want the support of a commercial litigator on your side. Business disputes are common in the business world, especially when significant sums of money are involved. When there are intricate agreements, poorly drafted contracts, shareholder disputes, copyright infringement, or other matters in dispute, a business owner will need a lawyer with expertise who can understand the issues, and help guide a path towards resolution. 

Here are just a few examples of disputes we handle in our commercial litigation practice at Pavey Law:

Non-Solicitation or Non-Competition Disputes

The rules around non-competition clauses in employment contracts may have changed in recent years, but that does not mean that these agreements are not still critically important for a business. Independent contractors or other businesses, for example, may still be bound by non-competition clauses, and non-solicitation clauses are also one of the key ways that businesses protect their interests. 

If you learn that a former employee or partner has been making moves that deliberately harm your business – either by poaching team members or by taking clients that they know to be yours, you need to act quickly. A commercial litigation lawyer can help review the agreements that you have in place, and/or the relationship with the employee, and then work with you to assess the next steps.

Based on the other party’s behaviour, a cease and desist letter that reminds them of their contractual obligations may be enough to get them to stand down. Otherwise, if they continue to harm your business, your lawyer may need to move to litigation quickly, such as an injunction, to stop this behaviour in its tracks. 

Partnership and Shareholder Disputes

Just like a marriage, a business partnership is started with the best of intentions, but when things turn sour, they can get ugly fast. If one partner has a different vision for the business than the others, or multiple partners decide that they no longer want one of their partners involved with the business, the business break-up can turn toxic. 

Generally speaking, partnership and shareholder agreements are written with clauses that outline exactly what would take place if a partner needed to be removed, or how a partner should be voted out. Similarly with shareholder disputes, shareholder agreements should outline mechanisms for shareholders to exit to put an end to the conflict and allow the company to move forward.   

Oftentimes, shareholders do not have a shareholder’s agreement in place.  Thus, when there are concerns that a minority shareholder is being excluded by the majority shareholders or a shareholder, who may also be a director and officer of the company, has breached their fiduciary duty, the parties may want to act. Obtaining advice from a commercial litigation lawyer is vital to understand the options to provide for an exit of a shareholder and/or officer and director of the company.  

Breach of Contract

It’s easy to assume that both parties will honour their obligations in a contract, but this is not always the case. When one party fails to deliver on their promise, or fails to pay what they said they would, the two can easily end up in a dispute. A contract may spell out requirements for how disputes must be solved, such as through arbitration. Otherwise, one party may make a claim (file a lawsuit) against the other.

There are several types of remedies that parties can seek in a breach of contract case. The first is for damages, aka money. If one party is at a financial loss because of the other party’s failure to perform their obligations, then they can sue for damages to cover the extent of their lost income or revenue.  Alternatively, in some instances a party may be able to claim for specific performance, where the court can order the other party to fulfil their obligations under the contract. This can occur when damages are not an appropriate remedy. 

Business Torts

Just as individuals can wrong each other, so too can businesses. Torts is a general legal term for when one party commits an ‘actionable wrong,’ or a misdeed for which one can take legal action, against another. In the business context, torts involve one business harming another, and may take a variety of forms. 

For example, if two businesses have a contract for goods or services, and a third business knows about that agreement and still induces one of the parties to intentionally breach that contract, leading to damages suffered by the party who lost out on the agreement, that can qualify as the tort of inducing breach of contract.

Similarly, you may be dealing with a vendor or supplier who commits a tort against your business through fraud or deceit. They may have misled you about the quantity or quality of the goods that they are selling you or have misled you on shipping or manufacturing times that ultimately damages your business and costs you relationships. 

The breaches may even be more serious, such as defective products which you then go on to sell through your business that injure a third party. If there are clear hazards in using the products which you have failed to identify or which your business was not made aware of, and another individual was harmed, there may be potential for significant legal damages. 

Final Thoughts

Having a commercial litigator by your side can be invaluable during a difficult time. You may hope you never need their services, and you do your best to act honourably and avoid any disputes. Yet should a problem arise, they’re the lawyers who you want in your corner. 

Our lawyers have extensive commercial litigation experience handling disputes throughout the Cambridge, Kitchener and Waterloo Regions. Contact us today to set up a consultation.