Breach of Contract Disputes
Businesses or business partners also have disputes among themselves. Contractual disputes can arise from an unequal bargaining position of one company or individual with respect to the other. As such, there is typically a situation where one takes advantage of the other or otherwise misuses its influence or difference in size and resources with the other party to either breach a contract or deceive the smaller entity. Our New York City contract litigation attorneys handle cases for small businesses against larger companies for these sometimes complex breaches of contract and fraud claims.
This disparity in bargaining can also arise among individuals. Our firm handles and seeks cases representing professionals i.e. business entrepreneurs, real estate and construction professionals, doctors, lawyers, accountants, and others when they want to effect a “business divorce.” Splitting assets in a business divorce can be messy and difficult depending on the age of the partnership, and the financial, proprietary or emotional investment that one person has in the company. Parties in litigation can have widely differing views on who gave of him/herself more to the company, who provided the initial and seed funds for the company to even begin business, and who contributed to its ultimate growth.
Consumers should also be aware that a breach of contract case is very different than a case of fraud. The time-honored law in New York is that a breach of contract is not always accompanied by a fraud. In fact, judges are wise to finding merely a breach of contract and specifically NOT a fraud. While it is true that a plaintiff is the master of his/her pleading, and that a plaintiff can always plead in the alternative, these two claims are sometimes mutually exclusive. Put differently, a subsequent breach of contract by the offending party will often not be viewed by the court as a fraud at the inception of the contract. As more fully explained in the fraud sections of this site, fraud is essentially a lie: a misrepresentation by one party to another to induce the victim into paying or acting to his/her detriment.
However, the specter of long-term litigation between both parties should also serve as a “hard-pill” to the litigating parties. The cost and aggravation of long-term litigation can usually get the parties to the negotiating table at the early stages of litigation. But depending on the stakes at issue, aggressive litigation may be the only way out. The law surrounding business disputes depends mainly on the agreement between the parties [to the extent it complies with New York Corporation or Partnership law], and the statutory laws themselves. The New York City contract litigation lawyers at Benjamin Hart, P.C. have prosecuted cases under allegations in both the New York Business Corporation Law § 701, et seq., and the New York Limited Liability Company Law for managing members, who allegedly misappropriated company funds. There are numerous other laws that govern business relationships though two significant ones are mentioned here.
An overriding principle in a “business divorce” case is a Court’s general reluctance to dissolve a profitable business. However, Courts can usually not deny that certain parties cannot remain “married” in the business forever. In that instance, an alternative dispute resolution system is most often helpful in getting the parties to get to the table together with their counsel and a neutral and experience arbiter, and work out differences or a division of assets. Mediation or binding arbitration can usually save the parties tens of thousands of dollars in attorneys’ fees, avoiding a contentious litigation process.
A corollary to a total breakup amongst members of a company is perhaps a reorganization of management decisions and responsibilities. If the majority of members agree that a profitable business should keep going, a restructure of the e.g. management of the operations, personnel, appropriation of funds, can sometimes resolve differences. While litigation is usually a last resort, there are options short of litigation that can the parties happy and avoid the tremendous costs of a long, drawn out lawsuit process.
Please contact us online or call us today at (212) 835-1532 for a free initial phone consultation with a contract litigation attorney in New York City.