Business attorneys going over contract

5 Common Causes of Business Contract Disputes

When it comes to business contracts, it’s not uncommon for disputes to arise between the parties involved. Though contracts exist to ensure terms are met and agreed upon, conflicts and disagreements still abound.

Business law is complex and involves many moving parts. Many times, the courts may be the only solution to resolve a dispute. In Rhode Island, there are five common business contract disputes.

1. Breach of Contract

One of the most common contract disputes is called a breach of contract. Breach of contract is when one or multiple parties fail to comply with the terms of a contract or fail to perform their obligations as outlined in the agreement.

Breach of contract may stem from various reasons, some more evident than others. Nonetheless, when a party does not uphold obligations, the other party is legally entitled to file a lawsuit and sue for damages and losses.

Some of the most common reasons for the breach of a contract include:

  • Non-compliance
  • Negligence
  • Fraud
  • Non-payment
  • Contractual error
  • Improper administration
  • Breach of duty

In many cases, parties may misinterpret terms in the contract. Whatever the reason, any time obligations are not met, you may claim breach of contract.

2. Non-Disclosure Agreements (NDAs)

Whenever a business looks to secure sensitive information, it may request employees, partners, and other parties to enter into a non-disclosure agreement (NDA). Company information or trade secrets can become particularly private topics, should they become public.

An NDA is a legal contract that ensures information will not become public knowledge. Failure to comply with the terms of an NDA may result in a dispute and is grounds for a lawsuit. Some provisions that often lead to conflict include:

  • Length of non-disclosure
  • Parties involved in the agreement
  • Exclusions from confidentiality
  • Definition of confidential information itself

Whenever you draft an NDA, it’s essential to be as detailed as possible. Otherwise, your information may be at risk.

3. Poorly Defined Roles

When you draft a business contract, you must work alongside each party to define the roles and responsibilities as clearly as possible.

Business contracts often will be vague about specific duties or expectations, leading to misinterpretation. In any business contract, transparency is critical. When a party fails to effectively communicate a term in a contract, conflict can ensue and lead to significant problems.

4. Employment and Labor Issues

Though most organizations outline employee agreements and expectations in contracts and employee handbooks, there’s always room for error on both sides.

Common labor disputes may include:

  • Breach of non-compete agreements
  • Workplace harassment 
  • Failure to comply with professional obligations
  • Wrongful termination
  • Discrimination

When an employer or employee fails to comply with the terms of a contract, parties may become involved in litigation regarding labor laws and other associated matters.

5. Gross Negligence

In business, negligence is a legal term covering harmful behavior that results in harm and losses. A lawsuit may be appropriate when a party doesn’t meet agreed-upon expectations or fails to act in good faith. 

Courts will consider several factors when dealing with a negligence claim, such as:

  • The severity of the harm
  • Whether a different course of action was available
  • Contractual obligations and responsibilities

Negligence can quickly turn into a business dispute, and when the losses are significant, it may result in serious financial and legal consequences.

Business Disputes in Rhode Island

Any business dispute can become a stressful and complex legal issue. The Law Offices of William M. Kolb, LLC represents business litigation cases throughout Providence, RI. Our specialized business attorneys can review your case and advise you on the best course of action. Consult with us today if you’ve become involved in a business dispute.