The threat of business litigation can be disastrous for a company or sole trader, and it may even be enough to put you out of business completely. Whether you’re running a multi-million dollar empire or a side-business from home, avoiding business litigation and resolving disputes early is vital.

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To find out more, take a look at some of the most common causes of business litigation and how you can avoid them…

1. Contract breaches

Businesses enter into contracts all the time, whether it be with their landlords, their suppliers or their clients and customers. Although some contracts can be verbal, obtaining a written contract is advisable as it helps to avoid the other party from backtracking on the terms in the future.

If contracts are poorly worded or lack essential information, however, litigation can arise. Ensuring your contracts cover every eventuality and include dispute-resolution measures can be a useful way of avoiding unnecessary litigation.

2. Negligence claims

If your business or employee inadvertently causes damage or harm to someone or something, you could be held liable. If you carry out electrical works on a residential home and damage the property, for example, you may have acted negligently and you could be liable. With the right insurance for electricians, for example, however, you can ensure that potential negligence claims are dealt with appropriately and that they don’t have disastrous consequences for your business. With trade and industry-specific policies available, as well as public liability and employer liability policies, it’s easy to get the right level of protection for your company.

3. Employee claims

Employees have a variety of rights and employers should always uphold the law. If employees believe they have been discriminated against or unfairly fired, for example, they could bring a claim against you. Unfortunately, poor HR practices and unclear employee contracts can give rise to these types of disputes. Having an effective in-house HR team or outsourcing your HR requirements to specialists can help to ensure you’re meeting your legal obligations as an employer and can reduce the number of potential claims which could be leveled at you.

Avoiding Business Litigation

Dealing with litigation can be extremely costly and stressful. As well as having a significant impact on your business functions, litigation can result in negative publicity and unwanted scrutiny too. In many cases, however, expensive and time-consuming litigation can be avoided by streamlining your businesses processes and getting expert help when you need it.

Protecting your employees, clients and the general public via insurance policies ensures you won’t have to pay out directly if accidents occur, for example. Similarly, understanding your legal responsibilities as a business and/or as an employer will ensure you’re able to operate legally and without the risk of employee-related claims.

With many companies forced out of business due to spiraling legal costs, litigation needn’t be your first option when it comes to dispute resolution. Getting the right legal advice could give you a range of resolution options, which may reduce the cost of sorting out any existing disputes and minimize the long-term impact on your business.

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