5 Disputes That Can Lead to Litigation for North Carolina Business Owners

As a North Carolina business owner, you strive to avoid the conflicts that can erupt into expensive, time-consuming lawsuits. You work with a Gastonia, NC business law attorney on contract review and drafting, regulatory compliance, licensing, employment matters, and many other tasks, all with a goal to reduce the potential for disputes. When disagreements do develop, there are several options for resolving them without major cost or disruptions, including mediation and negotiations.

Unfortunately, despite your best efforts, your company could end up facing litigation – either in pursuit of your interests or defending them. While you can rely on your lawyer for legal help, it is important to be aware of the types of disputes that can lead to litigation for North Carolina business owners.

1. Breach of Contract: With any arrangement that imposes obligations upon and imparts rights to a business entity, there is the potential for disagreements. Keep in mind that a breach of contract matter can arise out of an oral agreement, though there are certain contracts that must be in writing to be enforceable. Also, note that some agreements are governed by North Carolina’s Uniform Commercial Code, which incorporates some rules and remedies that depart from common law breach of contract rules.

2. Intellectual Property Disputes: Employees and third parties may have access to your company’s customer lists, technology solutions, models, and other trade secrets – all of which have substantial value, even if it is intangible in nature. There are multiple strategies for protecting these assets, and it is possible to pursue various remedies through litigation if a person or entity misappropriates them.

3. Disagreements Among Stakeholders: Even when you have a well-crafted operating agreement and/or shareholders agreement in place, internal disputes can be extremely disruptive and costly. Some of the most frequent areas of conflict include:

• Unlawful transfers of shares or ownership assets to an outside person or organization;
• Disagreements about business transactions or daily management issues;
• Disputes about company growth, expansion, or winding down; and
• Many others.

4. Fraud and Breach of Fiduciary Duty: You would hope your company would never be in a position where a stakeholder engages in misconduct, but individual owners may need to address or defend such accusations. Many allegations of wrongdoing center on North Carolina statute on fiduciaries, which applies to officers and those holding positions of trust within the company. Fiduciaries are required to act in good faith, comply with duties of loyalty, avoid conflicts of interest, and other obligations. Disputes over breach of fiduciary duty often wind up in court.

5. Conflicts Over Restrictive Covenants: Many companies include confidentiality and noncompetition clauses in employment agreements or severance agreements with former employees. When someone breaches a restrictive covenant, you may have legal and equitable relief through litigation. The key with disputes over these clauses is whether they are enforceable, since restraints on trade are generally void. However, when it meets North Carolina requirements on restrictive covenants, you have grounds to seek appropriate remedies.

Consult with a North Carolina Business and Commercial Lawyer About Your Options

While business owners cannot always avoid litigation, you are in a better position to assess your circumstances and plan ahead when you know the types of disputes can often erupt into lawsuits. If you are contemplating legal action or have been served with paperwork, please call Mullen Holland & Cooper P.A. to discuss your circumstances. You can schedule a consultation by calling our Gastonia, NC offices at 704.864.6751 or filling out our online contact form. Our firm represents business clients across Western North Carolina, so we are ready to advocate on your behalf.