What Is the Difference Between Business Litigation and Commercial Litigation?

The difference between business litigation and commercial litigation is that business litigation involves internal governance of a company and commercial litigation involves disputes related to commercial transactions.

Business litigation cases include partnership disputes, shareholder conflict, mergers and acquisitions, breach of fiduciary duty, trade secrets, and regulatory compliance. Commercial litigation cases include contract disputes, debt collection, insurance coverage disputes, and business torts. Commercial law disputes seek court injunctions or money damages for financial losses.

This article will explain some common issues in business litigation and when it’s a good idea to speak with an experienced business litigation lawyer about your case. 

Is There a Difference Between Commercial Litigation and Business Litigation? 

“Business litigation” and “commercial litigation” are often used interchangeably. They are both types of civil litigation involving businesses, and business litigation lawyers may handle issues in both areas. 

But despite the similarity, there are some key differences between them. Business litigation involves legal issues that are more internal to the business and its operations. Examples include employee and shareholder disputes and compliance with federal and state regulations. Commercial litigation focuses more on a business’s transactions or relationships with other companies or customers, such as contract disputes or issues in the sale of goods.

“There’s a wide range of things that come within business litigation, including disputes between companies, between consumers and companies, and between employees and companies that might not come within employment litigation,” says Benjamin I. Fink, a business litigation attorney at Berman Fink Van Horn in Atlanta, Georgia.

10 of the Most Common Types of Business Litigation

Business litigation law touches on many different areas of law and includes “a very wide range of litigation involving businesses,” says Fink.  Some of the most common types of business litigation issues include the following areas.

1. Breach of Contract

When two parties have a contract with one another, and one of the parties fails to perform their part of the deal, that party is in breach of the contract.

For example, two companies could enter into a contract under which one company purchases a specified amount of the other company’s merchandise. If the company that agreed to buy the merchandise fails to follow through, it’s in breach of the contract. The company that suffers the breach can sue to enforce the contract or seek compensation. 

2. Breach of Fiduciary Duty

A fiduciary duty is an obligation to act in the best interests of another person. In a corporation, the board of directors has a fiduciary duty to act in the best financial interests of the company’s shareholders.

A breach of fiduciary duty can arise when a board member has a conflict of interest or engages in self-dealing. 

3. Partnership Disputes

If the people who started a business disagree about how to operate the company going forward, this can lead to legal issues. Partnership disputes may go beyond disagreements and involve the misappropriation of funds.

Legal action or alternative dispute resolution may be needed depending on the issue. 

4. Intellectual Property Disputes

Companies can have many types of intellectual property rights. For example, a company’s trade secrets are information it protects because it gives it an economic advantage.

Trade secrets include formulas, recipes, or manufacturing designs and processes. Business litigation lawyers can help protect a company’s intellectual property rights against infringement or other violations.  

5. Non-Compete and Unfair Competition Issues

Non-compete agreements are a type of contract between an employer and employee. They aim to prevent employees from taking confidential information or employer training and using it against the employer as a competitor. 

6. Class Actions

Class action lawsuits often arise in the context of personal injury or product liability claims, for example, when a company’s defective product causes harm to its users. 

7. Fraud

Fraud is the intentional misrepresentation or withholding of facts from another party to obtain an unfair benefit. It can arise in many business-related contexts, including the sale of goods and business transactions. 

8. Business Torts

A business tort is a wrongful act committed against a business that causes it financial harm. A major business tort is called tortious interference. This is when a third party intentionally interferes with a company’s current or prospective contracts or business relationships to cause the company economic harm. 

9. Employment Law Issues

Employment issues can include anything from wage-and-hour disputes to wrongful termination to discrimination claims. It’s crucial for business owners to have legal advice to avoid such issues up front or to deal with them effectively should they arise.

10. Insurance Coverage Issues

If a business and an insurance company dispute the scope of coverage, or one party claims a breach or insurance fraud, litigation may be involved. 

Alternatives to a Lawsuit and the Difference Between Arbitration and Litigation

Depending on the legal issue, business lawsuits may be filed in state court or federal court. If the business dispute involves a smaller amount of money, a business owner may pursue legal action in small claims court. The amount of money a small claims court can handle varies by state. 

The benefit of filing in small claims court is that it tends to be less expensive and time-consuming than pursuing a lawsuit in regular court. If the legal issues involved in the dispute are relatively simple, business owners may be able to handle the matter on their own, without an attorney. However, when a business’s future is at stake, it’s wise to seek an attorney’s advice before taking any legal action.

Alternative dispute resolution (ADR) is another way to resolve business disputes without going to court. “There are also alternatives to a lawsuit, arbitration being the most common, as well as mediation, in which parties try to resolve the issue rather than litigate it,” says Fink.

In arbitration, a third party, such as a professional arbitrator or retired judge, facilitates the process and helps the parties arrive at a settlement. Arbitration and other forms of ADR can be less expensive and time-consuming than litigation. An experienced attorney will be able to help you assess if ADR is a good option for your case.  

Find an Experienced Business Litigation Attorney 

If you are a business owner considering legal action, consider speaking with an experienced business litigation lawyer about your situation. Even if you end up not going to court, getting insight from a legal professional will ensure you take the best course of action for your business. 

Look for a business litigation attorney in the Super Lawyers directory for help with your business-related legal issues.