A business conflict can refer to a broad range of legal issues or disputes. In general, a business conflict may involve issues including:

  • A conflicts between the business and outside parties;
  • A conflicts between members of the business; or
  • A conflict between two or more businesses.

The majority of business disputes involve a breach of a business contract. This often occurs between a seller and a purchaser. 

Business conflict lawsuits often focus on issues such as:

  • Faulty products;
  • Failed mergers;
  • Copyright protections; or
  • Privacy clauses. 

Other related business terms such as conflict of interest may refer to a party who cannot serve in a certain position because of their personal background.

What is a Conflict of Interest in Business Law?

In business law, a business conflict of interest typically refers to a situation in which an individual’s own private interests conflict with their professional interests or responsibilities. In many cases, conflict of interest involves a breach of the individual’s duty of loyalty to their corporation or business organization. 

The fiduciary duty of loyalty is a type of fiduciary duty in which a fiduciary, or individual acting on behalf of another individual to manage their assets, must act in the best interests of another. The law requires the fiduciary to act in good faith with fairness and honesty. The fiduciary may not be involved in any self-dealing transactions, conflicts of interest, or any other actions for personal advantage.

For example, a conflict of interest may occur when corporate members are on a board of directors for a corporation. The members owe their corporation duties of loyalty as fiduciaries. If they take advantage of certain business opportunities to the detriment of the corporation, there may be a conflict of interest.

Suppose a board member received an offer to invest through their work in the company but did not disclose the investment opportunity to their company first. This may be considered self-dealing and a violation of the fiduciary duty of loyalty. In a business setting, individuals may be required to abstain from participating in certain corporate decisions in order to avoid conflicts of interest. Serious conflicts of interest may lead to legal penalties or consequences.

Common examples of conflicts of interest in a business setting may include:

  • Self-dealing, which occurs when a director or officer enters into a transaction with another organization that benefits them, but causes a detriment to the company;
  • Gift issues. Business laws may prohibit officers from receiving gifts from any individual or company with whom the company does business in order to help dissuade bribery issues;
  • Outside employment conflicts, which may occur when a corporate official is employed with more than one company. The employee’s interests in one job may not conflict with their interests in the other;
  • Confidential employment conflicts, which may include trade secrets, insider trading, or securities fraud or other types of securities violations; or
  • Family interests, or nepotism. This occurs when an individual is hired based on their familial relationship with a director or officer and not based on their qualifications.

What are Some Examples of Business Conflicts?

A business conflict may involve a wide range of issues. Conflict may arise at any stage in the life of a business. Examples of business conflicts may include:

  • A conflict between a buyer and a manufacturer, distributor, or seller;
  • A disputes over business assets or securities;
  • A conflict between organizations, such as those that arise during a merger;
  • A conflict between employers and employees, or amongst employees;
  • A violation of state or federal business standards;
  • Business debt conflicts;
  • An infringement upon protected copyright or trademarked material; or
  • A breach of a business agreement.

What are Some Typical Legal Remedies for Business Conflicts?

There are various types of legal remedies that may be available for business conflicts. These may include:

  • A damages award to cover financial losses;
  • An injunction, where a court orders a party to take certain actions or cease certain actions;
  • An intervention by a government agency, which is especially common for federal or state violations, such as discrimination or harassment.

If the business conflict involves a contract issue, the remedies for contract issues may apply. This may allow the parties to rewrite the contract or to revoke a clause.

What are the Remedies to a Breach of Contract?

A contract is an agreement between two or more parties that creates legal obligations. If one or more parties to the contract do not perform according to the terms of the contract, a breach of a contract has occurred. The remedies for breach of contract include:

  • Money damages;
  • Restitution;
  • Rescission;
  • Reformation; and
  • Specific Performance.

Money damages are monetary payments that a breaching party is required to make to compensate for violating the terms of the contract. The extent of the damages will be determined by the type of breach. If there is a total breach, the plaintiff may be able to recover the sum or value which they would have received had the contract been fully performed by the defendant. This may include lost profits.

If a partial breach occurs, the plaintiff may recover a sum that equals the amount necessary to hire another individual to complete that portion of the contract. In some cases, a court may award damages equal to the difference between the value of the contract as performed and the value of the contract as originally agreed to by the parties.

Monetary damages may include compensatory damages or punitive damages. Compensatory damages are meant to compensate the plaintiff for the loss incurred as a result of the contract breach. 

Punitive damages are rarely awarded in contract cases. These damages are meant to punish the wrongdoer for outrageous behavior and deter the defendant and others from similar future behavior. Punitive damages are awarded in addition to compensatory damages at the discretion of the court.

Restitution is intended to restore the injured party to the position they were in prior to the contract. The defendant is required to return any money or property received from the plaintiff under the contract. It is not intended to compensate the plaintiff for lost profits or other earnings resulting from the breach of contract.

Rescission occurs when the contractual duties of both parties are terminated by the court. This remedy is used in cases where the parties entered into a contract because of mistake, fraud, undue influence, or duress and the only way to remedy the issue is to terminate the contract.

Contract reformation may be an appropriate remedy to correct inequities in the contract. In some cases, instead of setting aside an entire contract, a conflict may be resolved by rewriting certain terms or clauses of the contract.

Specific performance is a remedy that requires the breaching party to perform their duties as outlined in the contract. This remedy is used when monetary damages are not adequate to compensate the non-breaching party. It may be used in cases involving real property or an item that is valuable to the plaintiff. 

Do I Need a Lawyer for Help with Business Conflict Lawsuits?

Yes, it is essential to have the assistance of an experienced business attorney for any business conflict issues. Business conflict issues may be complex and involve multiple areas of law. An attorney can review your case, determine what remedies may be available to you, and represent you during any court proceedings if necessary.

It is important to note that an attorney can be invaluable prior to any conflicts arising. An attorney can help draft contracts, rewrite contracts, and even review already completed contracts for potential conflicts that may arise in the future. Having any attorney assist with your contract can be the difference between successful business matters and future conflicts.