Business Litigation & How to Avoid it

How To Avoid Litigation In Business

What is business litigation?

Business litigation is a type of dispute resolution that involves resolving disputes between businesses or between businesses and individuals. These disputes can be over contracts, property, employment, or other issues. Businesses may choose to resolve their disputes through arbitration, mediation, or litigation. 

Specifically, business litigation is the process of taking a dispute to court and having a judge or jury decide the outcome. This type of dispute resolution can be expensive and time-consuming, but it may be the only option if the parties are unable to agree on a resolution.

How to avoid litigation in business

Starting a business and ensuring its growth is an endeavour that requires proper planning. As such, it’s not enough to only have the strategies to ensure growth and expansion, but also strategies to ensure compliance in all legal aspects involved in your business’s industry.

Understanding the laws applying to a business is crucial to a company’s longevity. This is because failure to have a proper grasp of business laws can result in legal problems, which can often cost a lot of money. These legal problems can harm the public image of a company and, in some situations, result in the closure of a business.

Primarily, this article will discuss the business laws every organisation should be familiar with to avoid running into legal problems. It will also consider how to navigate business litigation.

Business Laws regarding litigation


Before an individual or a group of people can start a business, they have to acquire a permit from the government. Depending on the country and industry, there are different penalties for failing to obtain a permit from the appropriate governing bodies. 


There are different legislation requirements regarding how a business should treat its employees. This involves the kind of working environment a company creates, minimum wage, and access to compensation.


Australia has tax laws that every company must abide by. Failing to comply with these laws can attract severe consequences, as stated in the legislation regarding tax payments.

Intellectual Property

In many cases, there are regulations, otherwise known as copyright laws, that determine the use of a person’s intellectual property. This means that before a company can use copyrighted material, it must seek permission from the copyright holder. 

Contract Law

When parties sign a contract, it becomes mandatory that they fulfil their part of the deal.

Types of business litigation

Breach of contract

Breach of contract is a common type of business litigation. This happens when a company signs a contract and then fails to hold up its end of the bargain. This can cause the party on the receiving end to sue the company. In such a situation, the company will have to pay the aggrieved party for damages.

Employee dispute

If an employee feels that the company where they work has violated their rights, they can file a lawsuit. The violation of an employee’s rights ranges from harassment and discrimination to wrongful termination. It could also involve disapproved sick or maternity leave or a salary reduction.  

Intellectual property theft

A company commits the offence of intellectual property theft when they do not obtain consent from a copyright owner before using their creative work. The creative work could be in the form of an image, text, or even audio. If found guilty of this offence, the court may order the company to desist from the use of the intellectual property. In addition to this, the company might pay for damages.

Product liability claims

A product liability claim occurs when a manufacturing company produces and sells a defective product that causes harm to buyers. Customers who sustain injuries from using the faulty product can sue the company for damages. This often results in the organisation compensating the affected users for the defective product.

Partnership/shareholders dispute

Partnerships/shareholder disputes often take place when partners or shareholders cannot agree on certain areas. Consequently, a partner or shareholder may take the case to court. Some of the areas that can lead to disputes among partners or shareholders include the use of funds and assets. It could also involve how the company operates.

How to avoid litigation in business

Well-drafted contracts 

A well-drafted contract can help avoid disputes that lead to litigation. This is because a well-written and detailed contract will clearly state the obligations of all the parties. It will also provide what the outcome would be if a party refuses to carry out their part of the deal.

Proper documentation of agreements

Documentation of every agreement with other businesses or individuals is crucial in preventing business disputes and litigation. Proper documentation means keeping a record of important files such as receipts, emails, contracts, as well as agreement documents.

Ensuring a safe working environment

The safer the environment, the fewer the chances for an employee to be put in any form of danger. Consequently, this can eliminate cases where an employee files a lawsuit for sustaining an injury as a result of a hazardous work environment.

Establishing business policies and strategies

Policies help prevent malpractice or misconduct. A company, through its policies, can prevent misconduct such as harassment and racial/gender discrimination. 

Seek legal advice

A legal practitioner specialising in business can help provide the advice your business needs to avoid litigation. For help seeking legal advice, please contact us for guidance.

We can with business litigation & legal requirements for your Business

Always remember– this resource includes only a brief overview of legal considerations regarding business litigation in Australia. To keep your business safe from legal trouble, it’s best to read further into business courses or to work with professionals.

Business Legal Lifecycle is the only LegalTech website that keeps you fully informed on what you need to do to reduce your legal risk, empowering you with the knowledge to work with your lawyer and have the confidence to run a successful business.

Take a look at our Legal Risk Assessment, Jeremy Streten’s amazon best-selling book The Business Legal Lifecycle (in Australia, United Kingdom and the United States), and our Educational Courses.

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