Setting out on a business venture is meant to be exciting and productive. However, when business contract issues arise, everything that you have worked so hard for can be at stake. Familiarizing yourself with common contract disputes among Houston businesses and how to avoid them can help you protect your entrepreneurial work.
In this guide, we will explore common business contract issues in Houston, how to avoid them, and what to do if you find yourself in a heated dispute with a client, business partner, or stakeholder.
Common Contract Disputes Among Businesses in Houston
Settling a business dispute often requires the intervention of an experienced business dispute lawyer. Seeking the support of a knowledgeable business attorney can also help you avoid many disputes before they arise. However, before you can do that, it’s important to identify the underlying cause of these disputes so that you can proactively protect yourself and your organization.
Houston business contract issues are typically linked to one of the following matters:
Breach of Contract
A breach of contract occurs when one or more parties who entered into a contract fail to perform their legal obligations. Breaches of contract are, by far, one of the most common contract disputes. There are several different ways in which a breach can occur, including the following:
- Non-Performance: This occurs when one party fails to perform its contractual obligations.
- Delayed Performance: This happens when one party does not perform its contractual obligations on time or by agreed-upon deadlines.
- Delivering a Substandard Product or Service: One party delivers the service or product, but it is so flawed that the non-breaching party cannot use it as intended.
Breaches are often categorized as material or minor. A minor breach does not undermine the entire agreement and can often be remedied through compensation or negotiation. A material breach is a significant violation that affects the core purpose of the contract. In these instances, the non-breaching party may be entitled to compensation and contract termination.
Let’s say a construction company contracts a supplier to provide materials by a specific date, but the provider fails to deliver on time. The entire project may be delayed and lead to additional costs for the construction company. This could be classified as a minor or a material breach, depending on the amount of harm caused to the non-breaching party.
Ambiguity in Contract Terms
Any time you enter into a contractual agreement, the terms must be clear and legally enforceable. Vague or unclear terms can lead to differing interpretations, resulting in confusion about your responsibilities and the other party’s obligations. These ambiguities often arise when a contract fails to specify information, such as:
- Payment schedules
- Deadlines
- Performance expectations.
Issues resulting from unclear wording may seem like an easy fix. Unfortunately, that’s simply not the case. If you and the other party interpret vague terms in dramatically different ways, it’s going to take some tough negotiations to sort out the problem. You may even have to file a lawsuit.
Employment Law Disputes
Employment contract disputes are becoming more common due to strict labor laws. Some examples include the following:
- Allegations of underpayment
- Unpaid overtime claims
- Wrongful termination claims.
Let’s say that you terminate an employee due to underperformance. They may allege that you violated the conditions of their employment contract. On the other hand, if a former employee breaches their non-compete clause, your business may have to file a suit.
Intellectual Property (IP) Violations
Intellectual property is a valuable asset in industries like healthcare, manufacturing, and technology. Disputes over IP rights could involve disagreements over trademarks, patents, copyrights, or proprietary information.
Let’s say you run a well-established business that is known throughout Houston and the surrounding area. If a new business knocks off your trademark and logo, you may need to file an IP suit.
Partnership and Shareholder Disputes
Partnership and shareholder disputes can be particularly detrimental to your business. These conflicts typically stem from disagreements over profit distribution or the direction of the business. For example, if two business partners disagree on how finances are being allocated, one may accuse the other of mismanaging company funds.
If your business relies on shareholders or investment partners, it needs to clearly outline each party’s responsibility and decision-making powers. The contract should also provide an exit strategy in case of disputes.
Are you facing one of these common contract disputes? The Weisblatt Law Firm, PLLC is here to help.
Call (713) 666-1981 to schedule a free phone consultation with The Weisblatt Law Firm, PLLC.
How to Avoid Business Contract Issues
Many business contract disputes can be avoided by being proactive. Here are some steps to take when entering into a business agreement:
Draft a Clear, Detailed Contract
Make sure that you use a well-drafted contract. Ensure that all terms are explicitly stated, including the following:
- Scope of work
- Payment schedules
- Timelines (with dates)
- Procedures for handling breaches.
Speak to a contract or business attorney for assistance with drafting legally binding contracts that protect your company. Taking the time to create clear, detailed contracts can prevent many disputes altogether.
Talk About the Problem
Maintaining open lines of communication can preempt misunderstandings. Regular meetings and updates ensure that all parties are aware of the contract’s terms and deadlines. For example, if a project falls behind schedule, reach out to the other party to voice your concerns. Be upfront and transparent so that the two of you can reach a mutually beneficial solution.
Incorporate Dispute Resolution Clauses
Every contract needs to have clauses that outline mechanisms for resolving disputes. You can opt for mediation or arbitration. These alternative dispute resolution methods are often more cost-effective and quicker than litigation. If you aren’t sure which dispute resolution strategy is right for your business, talk to an attorney.
Keep a Record of Everything
You should save all documentation related to the contract in case a dispute arises. This includes emails, letters, performances related to the contract, invoices, and any other records that may be useful.
Call a Lawyer
If a dispute arises and you cannot resolve the issue on your own, seek a business dispute attorney. An experienced lawyer like attorney Weisblatt can provide timely guidance and support to address your concerns.
Attorney Weisblatt has represented business clients for decades and handles every case with determination and integrity. Countless satisfied clients have benefitted from his knowledge and passion for resolving business disputes. When you are facing a business dispute in Texas, The Weisblatt Law Firm, PLLC is here to help.
How The Weisblatt Law Firm, PLLC Can Help
Don’t let contract disputes derail your business and tarnish your reputation. Act fast and seek experienced legal representation from The Weisblatt Law Firm, PLLC.
Call The Weisblatt Law Firm, PLLC at (713) 666-1981 for a free initial phone consultation.
Attorney Andrew Weisblatt
Mr. Weisblatt has practiced continuously since becoming licensed in 1992 and has represented businesses ranging in size from one person start-up ventures to multi-national corporations employing hundreds of people in multiple countries. From 2005 through 2009 Mr. Weisblatt was in-house counsel and chief operating officer of a multi-national corporation in the steel products industry. That in-house position provided valuable insight into how businesses work and what they actually need from their lawyers – both in-house and outside counsel. Attorney Bio
