Running a company is incredibly challenging because there are countless details to track in order to ensure success. You must manage resources, production, distribution and employees while also being the face of a specific product or service.
Luckily, entrepreneurs may implement a significant tool for owners to manage expectations across distribution and professional relationships – contracts. However, there are times that contracts create more issues than they solve.
One of the most common contract disputes centers on employees – who may sign contracts with noncompete, nondisclosure and compensation detailing. The employee may accuse the company of “breach of contract” and seek additional compensation or damages for their treatment.
Some of the most common breaches of contract for employees include:
- Not paying for work expenses and holiday or sick pay
- Not paying during a notice period – a time when an employee plans to leave a job
- Changes to a contract that the employee did not know or sign off on
However, an employee can seek a lawsuit if they have proper reasons and evidence to show the breach.
Licensing and operation problems
Many issues could arise in the daily operations of a company, and typically, contracts establish how to avoid those issues and keep the company thriving. However, there are common breaches in licensing agreements that may lead to a court battle.
If a company may see lawsuits due to performance clauses, minimum payments and low sales, business owners must protect themselves by ensuring the proper agreements before signing any agreements surrounding operations or licensing.
Unruly shareholders or partners
One of the most challenging reasons for a contract battle is when a partner or shareholder accuses a company of breaching a contract. Some partners may argue that the owner is acting in a harmful manner or isn’t holding up to their responsibilities.
This specific reasoning can feel the most personal to a business owner when the conflict moves into court. However, it’s crucial that as the head of the company, you protect yourself and your business from any damage, especially during a contract dispute.