Business owners today face a much greater risk of finding themselves involved in a litigation suit. While every proprietor hopes to remain out of the court system, the fact remains that many businesses will find themselves involved with a disgruntled customer or vendor.

The best way to handle a dissatisfied consumer is to work the issue out without intervention from the courts. This can often be accomplished with courteous customer service representatives, interjecting techniques of flexibility and creativity when problem solving, and a willingness to apologise to the customer for the mishap. However, in the event that reasonableness fails, it is important for business owners to understand the process and the cost of resolving these issues via litigation.

A business can be sued for various reasons including;

  • Breach of contract
  • Tort liability
  • Wage and Employment Discrimination
  • Sexual Harassment
  • Consumer Discrimination

As a business owner it is important that you take the necessary precautions when dealing with daily business issues in each of these defined areas.

Breach of Contract: When entering into contracts with both customers and vendors, it is imperative that you have your contracts reviewed by an attorney that specialises in business transactions. If the contractual terms are clearly defined, and the manner in which any disputes will be handled is defined within the agreement, the likelihood of finding yourself in the midst of litigation over ambiguous terms and conditions, is lessened.

Tort Liability: Tort liability stems from negligence on the part of the business owner. As such, it is important that your premises are in compliance with all regulations and safety codes, and your employees are educated regarding the same. Employees should be reminded regularly to remain aware of physical safety issues and to promptly and properly report, or remedy, the same.

Wage and Employment Discrimination: Businesses can find themselves dealing with labor law issues surrounding wage and employment discrimination. To prevent these issues from arising it is important to be in full compliance with all of the laws and regulations surround compensation, sick time, vacation time, and health insurance mandates. In addition, any form of discrimination by an employer against an employee, or potential employee, can create significant legal issues. It is highly recommended that your company consult with, or hire, a human resources specialist to assist you in creating the proper employee handbook and necessary notifications to employees regarding all employment rights and responsibilities.

Sexual Harassment: A growing area of concern with businesses today is the happening of sexual harassment between management and employees and between employees themselves. Every business should take stringent preventative measures, including a no tolerance policy, against sexual harassment to reduce the likelihood of such a claim being filed against the business.  

Consumer Discrimination: It is imperative that business owners treat all customers equally, regardless of race, sex or national origin. If a business owner discriminates against a customer or vendor, the consequences could be very damaging to the businesses financial standing and reputation in the community.

In the event that your business is sued you will be required to move through the court process. Initially, a claim will be filed against your business and you will be expected to file a response on your behalf. Thereafter, a process of discovery will occur allowing the parties time to investigate and prepare their case. If the claim cannot be settled via negotiation and a settlement agreement, a trial will occur and a judgement will be issued by the court. The judgement will state the final outcome of your case including assignment of blame and determination damages, if applicable.

Damages usually take the form of being compensatory. This means that the damages the business is liable for will be actual in nature. Therefore, the actual calculable loss will be the amount owed by the business to the plaintiff. In a breach of contract claim damages can be predetermined within the terms of the contract. If the damages are defined within the contract itself, the court may choose to enforce the prior agreed upon damage calculations. While damages can take other forms, such as for pain and suffering, this result is seen slightly less in a commercial litigation situation. The most likely claims to cause a business owner to owe non-compensatory damages are those that involve emotional issues or physical pain.

If your business is sued for any of these legal infractions, the cost and the chaos your business might experience could be devastating. In the instance the court finds in flavor of the plaintiff consumer, the damages awarded and the legal fees could be financially crippling to the business owner. To protect your business and to prevent an undesirable legal outcome, it is highly recommended that your business consult regularly with a human resources specialist and an attorney specialising in all forms of business transactions and labor law issues.

In the event that you find yourself in need of such assistance, please contact the law offices of Owen Hodge Lawyers. At Owen Hodge, we are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 770 780.