1. Include Specific Terms

To avoid any misunderstandings between the parties, it’s crucial to be as specific as possible when drafting contracts. This means that the contract terms should be clear and concise to ensure both sides interpret them in the same way. Ambiguous or vague language is one of the most common reasons breaches of contract arise. A well-drafted contract leaves no room for misinterpretation or confusion about each party’s expectations.

2. Ensure the Identities of the Parties are Clearly Defined

A common pitfall in drafting contracts is the failure to clearly define the parties to the agreement. While it might be obvious that the parties need to be identified in a contract, it’s essential to include any affiliates or subsidiaries as necessary to avoid confusion. Inaccuracies concerning the identity of the parties can cause a contract to be breached and rendered unenforceable.

3. Avoid Using Boilerplate Contracts

If you are a business owner, it’s important to have the guidance of a business law attorney when drafting contracts and entering into contractual arrangements. Contact Litico Law Group to schedule a consultation to learn how we can assist you.

While boilerplate contracts can serve as a template, it’s best to avoid using them for anything other than a guide. Clauses in boilerplate contracts are often too general and produce unwanted results. Every provision in a contract should be tailored to the specific transaction and meet the needs of the parties involved.

4. Ensure the Contract is Conscionable to All Parties

If a contract is too one-sided, it may be rendered unconscionable. When drafting contracts for your business, the terms must not only be fair to your company, but to the other party as well. Courts typically will not enforce a contract that is deemed unconscionable and this can be asserted as a defense in the event the agreement is breached.

5. Address Any Potential Issues That Could Arise

A good contract should anticipate and address any potential issues that could arise and outline the measures that should be taken to mitigate them. Provisions should be included regarding dispute resolution methods, termination of the agreement, and remedies for any breaches of contract that may occur.

6. Consider Changes That Could Occur During the Term of the Contract

If the terms of the contract will be carried out over an extended period of time, it’s critical to consider any contingencies that could arise during that period. By including provisions concerning any uncertainties, modifications, or amendments, you can ensure the agreement will be adaptable in the event circumstances change and mitigate risk.

7. Ensure the Contract is Legally Compliant

One of the most important — and overlooked — aspects of drafting contracts in business is ensuring they are legally compliant. Creating a contract that violates a federal, state, or local law can result in liability issues or in the agreement being invalidated as unenforceable. It’s also vital to ensure the contract is compliant with public policy, privacy laws, consumer protection laws, industry-specific standards, and various other regulations. In addition, if the parties are domiciled in more than one state, the contract should specify which jurisdiction’s laws apply.

8. Specify the Payment Terms Agreed Upon By the Parties

Issues with payment terms is a common dispute that arises in connection with contracts. When drafting contracts, include detailed payment information, including the amount that is owed, the schedule for the payments, and the agreed-upon methods of payment. You should also include any penalties or late fees charged for payments that are not made on time.

9. Seek Experienced Legal Counsel to Advise You

The best way to safeguard your business interests in a contractual relationship is to seek the counsel of an experienced business attorney. They will know how to draft an airtight contract that will help prevent disputes and avoid possible contract issues that could harm your business and its bottom line. A business attorney has the skill necessary to create a contract that is free from loopholes and meets the requirements for your specific circumstances.

Contact an Experienced Illinois Business Attorney

If you are a business owner, it’s important to have the guidance of an experienced business law attorney when drafting contracts and entering into contractual arrangements. Located in Rolling Meadows, Litico Law Group provides reliable representation to individual clients, small businesses, entrepreneurs, and corporate owners throughout Illinois for a wide array of business matters, including those involving contracts. We welcome you to schedule a consultation, contact us online or give us a call at 847-307-5942 to learn how we can assist you.

Types of Employment Contracts

An employment contract is a document signed by an employer and employee that helps to ensure both parties fully understand their obligations. This type of contract will typically include terms regarding an employee’s job title, compensation, benefits, time off, causes for termination, disciplinary procedures, and company policies. Critically, employment contracts should be specifically tailored to the job and the workplace setting.

There are a variety of employment contracts a business may use, including the following:

• Severance agreements — These contracts are entered into upon separation from the company and detail the rights and responsibilities of both parties, along with any benefits to which an employee may be entitled.
• Non-compete agreements — A non-compete agreement can help to protect an employer’s trade secrets and business interests by preventing an employee from working for a competitor company upon separation. Under Illinois law, these agreements are void unless an employee receives adequate consideration and there is no undue hardship placed on them.
• Non-solicitation agreements — A non-solicitation agreement is a contract in which an employee agrees not to solicit a company’s customers or clients for their own benefit after separating from the company. Similar to non-compete agreements, these contracts are only enforceable if they are reasonable and comply with Illinois law.
• Non-disclosure agreements — A non-disclosure agreement is a contract that can prohibit an employee from disclosing certain classified information that they acquire during the course of their employment.
• Confidentiality agreements — A confidentiality agreement is a type of employment contract that is often used when an employee has access to proprietary information.
• Fixed-term contracts — A fixed-term contract is an employment agreement that specifies a start and end date. These contracts are often used for short-term employment and seasonal employment situations.
• Consulting agreements — A consulting agreement is a contract that is used when two parties engage in a business relationship while one party is an external consultant to the other.
• Freelance contracts — A freelance contract is a document that outlines the terms and conditions of a project between a freelancer and client. Not to be confused with an employment agreement, freelancers are not employees. Rather, they are self-employed individuals who do not receive employment benefits from the company with which they have contracted.

Employment contracts can be complex documents — whether you are the employer or employee, it’s essential to be aware that every type of employment contract comes with significant legal implications. An employment contract attorney can help ensure you fully understand the terms, conditions, and ramifications before entering into any agreement.

Employment Contract Disputes

From negotiating severance agreements to drafting employment contracts and confidentiality agreements, it’s important to have a business attorney with the knowledge and skill necessary to ensure your interests are protected. We welcome you to contact us to learn how we can assist you and your business.

Once an employment agreement is in place, both parties must abide by the terms. Even though Illinois is an at-will employment state, if a contract sets forth certain conditions (such as compensation or a specific length of employment), an employee may be entitled to recover their damages in the event the terms were breached by the employer. In addition to conflicts concerning termination, employment contract disputes can arise for a variety of other reasons. For example, if an employee fails to adhere to the terms of a non-compete or non-solicitation agreement, an employer may be able to hold them legally liable for the damages they suffered as a result.

Whether an employer deviated from the terms of the contract or an employee wrongfully disclosed trade secrets in violation of a non-disclosure agreement, it’s vital to have an attorney who can skillfully assess your case to determine the best course of action. In some cases, a form of alternative dispute resolution such as mediation or arbitration can be used to resolve your matter without the time and expense of litigation. However, if an agreement cannot be reached, litigation may be the only option to resolve the dispute.

Contact an Experienced Illinois Business Attorney

If you require assistance with an employment contract matter, it’s critical to have an experienced business attorney on your side who can advise you regarding your rights and protect your financial interests. Located in Rolling Meadows, Litico Law Group assists clients with a broad scope of business law matters in Illinois. We welcome you to schedule a consultation, contact us online, or give us a call at 847-307-5942 to learn how we can assist you.

From conflicts with partners to breaches of contract, every business owner can expect to encounter a dispute at some point. Legal disputes involving your company can be costly and time-consuming — and it’s important to identify and address these matters as soon as they arise. While a knowledgeable business dispute attorney can answer your questions based on your specific circumstances, the following are some of the most frequently asked questions when it comes to business conflicts:

1. What Are the Common Types of Business Disputes?

Business disputes can encompass a wide range of conflicts. Disputes can occur across various industries between partners, with vendors, employees, and even clients. Common disputes can include breaches of contract, shareholder disputes, intellectual property disputes, financial disagreements, breaches of fiduciary duty, and issues involving fraud or misrepresentation. Business conflicts can also arise in connection with non-compete agreements, non-solicitation agreements, deceptive trade claims, real estate issues, and compensation matters.

2. How Do I Know if I Need a Business Dispute Law Firm?

As a business owner, you shouldn’t wait until a dispute occurs to contact a business law firm. Not only can a good business litigation attorney assist you in the event of a conflict, but they can provide crucial guidance for a wide variety of business matters at every phase of your company’s development. A business attorney can also help ensure you have the appropriate mitigation measures in place to avoid disputes before they arise.

3. Are There Ways To Resolve a Business Dispute Without Going to Court?

If you are facing business disputes, you need an experienced attorney by your side who can advise you regarding your options and assist you with achieving a successful outcome. Litico Law Group provides skillful representation to business owners and entrepreneurs throughout Illinois.

Although it is sometimes unavoidable, litigation is not always necessary to resolve business disputes. There are several ways business owners may resolve their disputes without going to court. Mediation, arbitration, and negotiation are all forms of alternative dispute resolution that can be used to resolve conflicts outside the courtroom efficiently and cost-effectively. In addition, these methods of resolving disputes can also provide business owners with privacy and allow them to have more control over the outcome.

4. How Do I Know When I Should File a Lawsuit?

If you are facing a business dispute, a skillful business dispute attorney can assess your case and determine whether it is in your best interests to file a lawsuit. It’s typically a good idea to attempt to resolve a dispute before resorting to litigation — but if settlement talks fail or the other party is not willing to negotiate, it may be necessary to pursue a claim in court.

5. How Long Does It Take To Resolve a Business Dispute?

Every business lawsuit is different. The amount of time it will take to resolve a business dispute can depend on the complexity of the issue, each party’s willingness to settle the matter, and whether the conflict goes into litigation. If a business dispute is resolved in litigation, the timeline will depend upon the amount of discovery that must be conducted, the court’s calendar, the number of witnesses in the case, and various other factors.

6. When Is an Injunction Available in a Business Lawsuit?

There may be a wide variety of remedies available in a business lawsuit, depending on the facts of your case. In addition to monetary damages, you might also be entitled to equitable remedies, such as injunctive relief. Specifically, an injunction is a court order that prohibits a party from acting in a particular way where money damages would not be an adequate remedy.

7. If Litigation Is Anticipated, Can I Do Anything To Increase the Chances of a Successful Outcome in My Business Dispute?

In the event litigation is anticipated in a business dispute, there are a few things you can do to increase the chances of a successful outcome. Significantly, you should consult with a knowledgeable business dispute lawyer who can advise you regarding your legal rights and remedies as soon as possible. They can evaluate your case and inform you regarding the documentation and evidence you will need to help establish your claim. You may also need to notify your insurance carrier and limit your communication with the other party.

8. What Are My Remedies if Someone Breaches a Contract With Me?

A breach of contract is a serious matter that can significantly impact a company’s bottom line. The law provides several remedies for breach of contract matters. Depending on the facts and circumstances of the case, remedies can include canceling the contract, monetary damages, or restitution. Other remedies can include an injunction or specific performance of the other party’s contractual obligation.

9. Can I Still Sue for Breach of Contract if the Company That Owes Me Money Dissolved?

If a company that breached a contract with you owes you money, you may still be able to sue even if it has closed. Critically, if the company failed to dissolve properly, its legal existence has not ended — and you might still be able to pursue a claim against it. These situations can arise if the wrong forms were filed, creditors were not notified, or wind-up procedures were not carried out properly.

Contact an Experienced Illinois Business Dispute Attorney

If you are facing a business dispute, it’s crucial to have an experienced business litigation attorney by your side who can advise you regarding your options and assist you with achieving a successful outcome. Located in Rolling Meadows, Litico Law Group provides skillful representation to business owners and entrepreneurs throughout Illinois. We welcome you to contact us by filling out our online form or calling (847) 307-5942 to schedule a consultation to learn how we can help.

Directors and officers of a corporation, as well as managers and members of an LLC, must always act in the best interests of the company. A derivative lawsuit is a mechanism that can be used to protect shareholders from abuse by a corporation’s officers and directors by ensuring accountability when those in control fail to pursue legal action. Similarly, these types of actions can also be used when an LLC has been wronged by a manager or member. If you’re a corporate shareholder or LLC member, it’s important to understand what a derivative action is — and when it is necessary to bring one.

What Is a Derivative Action?

A derivative action allows a shareholder to bring a lawsuit on behalf of the corporation or LLC when the company itself has been harmed. Not to be confused with direct claims, these types of lawsuits are typically brought by a minority shareholder or LLC member to address the misconduct of a director, officer, or LLC manager who is not acting in the best interests of the company. They can also be brought by a minority shareholder, or a group of minority shareholders, against a majority shareholder.

A derivative action can be used to address a wide range of wrongdoing, including the following:

• Breach of fiduciary duty
• Allegations of fraudulent activity
• Unjust enrichment
• Corporate waste and abuse of company assets
• Self-dealing and conflicts of interest
• Insider trading

Derivative actions can be crucial for safeguarding the interests of shareholders and LLC members. These lawsuits help to ensure that the company enforces its rights and can recover the damages to which it is legally entitled. In addition to an award of monetary damages and equitable relief, a prevailing plaintiff in a derivative suit may also be awarded their attorneys’ fees.

Requirements for a Derivative Action

Derivative actions are complex, and it is essential to have a skilled business law attorney by your side to help you navigate the legal process. We welcome you to schedule a consultation to learn how our business lawyer can help.

When a company has suffered damages, the board of directors (or managers in an LLC that is manager-managed) typically make the decision regarding whether to file a lawsuit. A derivative suit can be brought when those who control the company fail to act. However, certain criteria must be satisfied before a legal action can be commenced.

One of the requirements that must be met before a derivative action can be filed is that a demand must first be made on the corporation’s board of directors, or managers/members of the LLC. This requirement may be waived if it can be shown that the demand would be futile — making a demand is usually not necessary in matters where the directors would be defendants in the case. In some instances, a lawsuit can be avoided if the board is able to resolve the issue after the demand has been made.

In addition, the shareholder bringing the suit must have been a shareholder of the company at the time the harm occurred, although there are specific exceptions to this rule. For example, a shareholder may have standing to bring a derivative suit if they acquired their shares by operation of law from a person who was a shareholder at the time the misconduct took place. A shareholder may also proceed with a derivative suit at the court’s discretion, if they acquired their shares prior to disclosure of the wrongdoing that is the basis of the action.

How Is It Determined Whether a Claim Is Direct or Derivative?

Sometimes, it can be difficult to determine whether a claim should be brought as a direct or derivative action. However, the legal processes and requirements for each type of lawsuit are different. If a shareholder is seeking a legal remedy which would benefit themselves, such as in cases involving a freeze-out, the suit would be brought as a direct action. If the company would benefit from the outcome of the action, the lawsuit would be a derivative action. Simply put, an action would be considered a derivative suit if the funds to be recovered belong to the company.

Some types of claims can only be brought as a derivative action. Others can be brought as either a direct claim or derivative claim, such as those involving conspiracy or a breach of confidential relationship, depending upon whether the injuries were suffered by the shareholder in their individual capacity or the corporation. Importantly, a demand to the board of directors must only be made in a derivative action — this requirement does not apply if the lawsuit is a direct action.

Contact an Experienced Illinois Business Litigation Attorney

Derivative actions are complex, and it is essential to have a skilled business law attorney by your side to help you navigate the legal process. Located in Rolling Meadows, Litico Law Group’s business litigation attorneys provide reliable representation and capable counsel for a wide array of business disputes in Illinois, including those involving derivative actions. We welcome you to contact us at (847) 307-5942 to schedule a consultation to learn how we can help.

Business partnerships can come with many benefits and help owners accomplish much more than they would as a sole proprietor. But partners will rarely agree on everything all the time, and business disputes are not uncommon. Unfortunately, when difficult scenarios arise, the company’s future and its bottom line can be placed at risk. It’s important to understand that there are many measures partners can take in advance to plan for challenging situations — and help prevent conflict.

How Do Partnership/Business Disputes Occur?

Two or more partners in a business endeavor will rarely agree on everything. Accordingly, there can be many causes of partnership disputes. Some common reasons for conflict among partners can include breach of fiduciary duty matters, financial disputes, and lack of specific provisions in a partnership agreement. Conflicts can also arise when partners disagree regarding who is doing what work or if tasks are not distributed evenly.

In addition, business disputes among partners can happen if they have differing opinions concerning the expansion of the company or the services being offered. There can also be disputes if one or more partners wish to leave the partnership. Regardless of the reason, there are a few measures partners can implement to avoid the potential for conflicts and the possibility of legal action.

How Can Business Disputes Be Avoided?

Partners will rarely agree on everything all the time, and disputes are not uncommon. Before difficult scenarios arise, contact an Experienced Illinois Business Attorney at Litico Law to help you understand the many advance measures partners can take to help prevent conflicts.

Many business partnership disputes can be resolved before they occur by making sure all partners are on the same page. It’s essential that partners communicate effectively with each other and understand each other’s responsibilities and obligations. Here are a few steps business partners should take to avoid future disputes that can result in legal action:

Identify the Goals and Objectives of the Partners

Business disputes often arise because partners do not share the same values, or they have different long-term goals for the company. Partners should discuss their objectives for the company and consider their ideas on the type of growth strategy they will employ and the leadership style that will be implemented. By taking the time to understand each other’s perspectives from the outset, partners can be confident in knowing that their approaches to operating the business are consistent.

Have a Written Partnership Agreement in Place

Having a formal, written agreement in place is one of the most crucial steps partners can take to avoid disputes and the possibility of litigation. Although a written partnership agreement is not required by law, it can be critical to protect the company and safeguard the financial interests of the partners. A partnership agreement can do the following:

• Resolve legal issues in advance
• Address the capital contributions of each partner
• Decide compensation and distributions
• Specify decision-making procedures
• Outline the methods to be used for conflict resolution
• Determine what will happen if a partner fails to perform their duties
• Address the circumstances under which the business can be terminated

While a partnership agreement is meant to help partners avoid conflict, it’s important to make sure it is as detailed as possible. Any ambiguity in terms or vague provisions could lead to disputes — and ultimately, litigation.

Clearly Define Each Partner’s Role and Authority

Partners should be clear regarding each other’s roles and authority when it comes to how the business will be run. Even if the partners share equal percentages of ownership, it’s vital to determine in advance who will handle the company’s day-to-day operations — and which partner will be responsible for the accounting and recordkeeping. The details of the partners’ roles should be put in the written partnership agreement.

Address Dispute Resolution Matters

Even when all partners get along, partnership disputes are inevitable. Partners should take the time to discuss all issues that could arise early on. They should also agree on a method of dispute resolution before conflicts occur. While litigation should only be used as a last resort, alternative dispute resolution methods such as mediation or arbitration can help to resolve disputes cost-effectively and efficiently. The partners’ preferred method of resolving conflicts should be specified in the written agreement.

Work With a Business Disputes Attorney

A business dispute attorney can not only assist business partners with handling disputes when they arise — they can also help them avoid conflicts. An attorney can work closely with the partners to prepare the necessary paperwork and agreements to help ensure the company thrives. They can also help the partners devise a strategy tailored to meet the company’s vision and specific needs.

Contact an Experienced Illinois Business Attorney

If you are forming a business partnership, it’s important to have an experienced business law attorney on your side who can help you avoid future legal disputes and complications. Located in Rolling Meadows, Litico Law Group provides skillful representation to business partners and entrepreneurs throughout Illinois for a broad scope of business matters. We welcome you to contact us by filling out our online form or call (847) 307-5942 to schedule a consultation to learn how we can assist you.

Contracts usually outline the terms of a deal and provide a legal remedy in the event there is a dispute. However, under Illinois law, a party may still be entitled to commence a legal action in the absence of a contract to recover their damages should there be a conflict. Quantum meruit and unjust enrichment can help to protect a plaintiff in cases where a defendant would receive an unfair benefit at their expense. The guiding principle of these legal remedies is fairness — and safeguarding a plaintiff’s interests so they will not be taken advantage of for the defendant’s own economic gain.

What Is Quantum Meruit?

Quantum meruit is a Latin phrase that can be translated to mean “as much as he deserved.” It is a legal remedy used in cases where someone has performed services but there is no contract in place — or the contractual agreement is defective in some way and unenforceable. While this would make suing for a breach of contract impossible, quantum meruit can help to ensure an aggrieved party gets at least some of their damages back in situations where they would normally receive nothing. Importantly, quantum meruit allows the party to recover the reasonable value of their work and material.

Quantum meruit is often used in cases where parties are eager to enter into a deal and forget to include key terms in a contract or fail to make a formal contract at all. A successful claim made under quantum meruit must demonstrate the following:

1. A service was provided for the benefit of the defendant;
2. The service performed for the defendant was not gratuitous;
3. The service was accepted by the defendant; and
4. There was no contract that detailed payment for the services.

The party asserting a claim under quantum meruit has the burden to establish their damages. The proof presented must be specific enough to demonstrate the value of the materials and services rendered.

What Is Unjust Enrichment?

If you’re experiencing a business dispute in the absence of a valid contract, or another party would be unjustly enriched by your services, it’s critical to protect your legal and financial interests. Contact an experienced business law attorney at Litico Law. We can advise you regarding your remedies and guide you through the litigation process.

Unjust enrichment is similar to quantum meruit but provides alternative relief. A claim made under unjust enrichment must show that the defendant was enriched while the plaintiff was impoverished as a result. A plaintiff must also show that the defendant’s retention of the benefit violated the fundamental principles of justice, equity, and good conscience. This claim can be asserted when there is no enforceable contract that governs the dispute. It can also be argued in cases where there was an enforceable contract, but a defendant’s tortious behavior gave rise to the claim.

In a claim for unjust enrichment, a plaintiff usually seeks to recover a benefit conferred directly to the defendant. But they may also seek to recover a benefit that was transferred by a third party to the defendant that belongs to them. In cases involving third parties, a plaintiff must allege that the third party should have given the benefit to the plaintiff but instead, they mistakenly gave it to the defendant — or the defendant obtained the benefit through wrongful conduct.

Notably, unjust enrichment claims are distinguished from breach of contract claims in that it does not require proving an actionable wrong. A plaintiff only must show that the defendant received a benefit that they were not entitled, and for which they should be compensated. While these claims may sometimes involve illegal conduct, wrongful behavior, or fault, such wrongdoing is not required to assert unjust enrichment.

What Is the Difference Between Unjust Enrichment and Quantum Meruit?

Both quantum meruit and unjust enrichment focus on the improper retention of a benefit. The same facts and circumstances might even be used to support both claims. However, there is one primary difference that should be noted — unjust enrichment and quantum meruit are differentiated by the way damages are measured.

Significantly, unjust enrichment focuses on the benefit received and retained as a result of the services provided by the plaintiff. Rather than damages derived solely from the plaintiff’s monetary expenditures. For instance, if the plaintiff provided labor and materials valued at $200, and the improvements made allowed a defendant to unjustly receive a benefit of $2,000, the plaintiff could receive a greater award for their damages than the $200 that had been expended.

Contact an Experienced Illinois Business Law Attorney

If you’re experiencing a business dispute in the absence of a valid contract, or another party would be unjustly enriched by your services, it’s critical to protect your legal and financial interests. An experienced business law attorney can advise you regarding your remedies and guide you through the litigation process. Located in Rolling Meadows, Litico Law Group provides knowledgeable representation to business owners and entrepreneurs throughout Illinois. We welcome you to contact us by filling out our online form or call (847) 307-5942 to schedule a consultation to learn how we can assist you.

A business dispute can be seriously disruptive to your company’s operations and bottom line. One of the first questions you might have if you’re facing litigation is how long your case will take to resolve. Importantly, every commercial case is unique and involves a different set of facts and circumstances. There is no specific timeline that can be applied to business dispute litigation — cases may be resolved in as little as a few months or they might take years, depending upon the complexity of the issue. However, there is a certain legal process that is followed for every matter.

Factors Affecting the Timeline for Business Dispute Litigation

The litigated business dispute timeline can depend upon many factors, including the parties’ willingness to mediate, discuss settlement, and resolve the matter outside of court. If you’re facing a business dispute, an experienced business law attorney can help you navigate the litigation process.

It is not possible to give a precise timeline when it comes to commercial litigation. The litigated business dispute timeline can depend upon many factors, including the parties’ willingness to mediate, discuss settlement, and resolve the matter outside of court. Other factors that can impact how long business dispute litigation might take can include the following:

• The complexity and number of issues in the case
• The amount of discovery to be conducted
• The court’s calendar and scheduling
• The number of witnesses and their availability
• The commitment of the parties to resolve the dispute
• The experience of the attorneys in the case

When something goes wrong during the course of doing business or a transaction does not go as planned, it’s essential to tackle the matter early on. In the event both sides begin settlement talks as soon as possible, the litigation process might only take a few months if an agreement can be reached. But when a business dispute involves a large quantity of evidence and requires multiple appearances in court, a case can go on for years.

The Business Dispute Litigation Process

There are a wide variety of conflicts a business owner can face. These can include breaches of contract or fiduciary duty, partnership disputes, misrepresentation, non-solicitation matters, deceptive trade cases, fraud, and more. Although the issue in each case might be different, the business dispute litigation process typically follows the same structure for every type of dispute.

Generally, an attorney will first investigate the facts involved with a commercial case. Once they have heard your position and reviewed any relevant documents, they can make a determination regarding whether litigation is the best course of action to pursue. Business dispute litigation usually follows the following sequence:

• Pleadings are filed — The business dispute litigation process is commenced when a complaint is filed with the court. The plaintiff then has a certain amount of time to serve it on the defendant. The defendant can either answer the complaint, file a motion to dismiss, or make counterclaims.
• The discovery phase — Discovery in business litigation is when evidence is exchanged by both sides. This is often the longest phase of the litigation process and can involve subpoenas, depositions, interrogatories, and other tools to gather information.
• Settlement discussions are held — While settlement discussions can be held at any point during the litigation process, both parties may attempt to resolve the case once they have obtained information through the discovery process, before proceeding to trial.
• The trial phase — If the parties do not reach a resolution, the trial phase of litigation will begin. From preparation to verdict, this phase of litigation can last several months. Trial includes several different components, including jury selection, opening arguments, questioning witnesses, and closing arguments.
• Settlement or a verdict — The parties are free to reach a settlement at any point in the case. It’s not uncommon for a case to settle on the eve of trial. However, if the case is decided by a jury, they will return a verdict after hearing the evidence and deliberating.
• Appeal — A jury’s verdict isn’t always the end of a commercial case. If a mistake of law or procedure was involved that would have rendered a different outcome, the non-prevailing party might choose to file an appeal.

Sometimes, a business contract might specify that mediation or arbitration must be attempted to settle a dispute before a lawsuit is commenced. Arbitration is a form of alternative dispute resolution that can sometimes be used to help resolve a commercial conflict efficiently and cost-effectively. In addition, if less than $50,000 of monetary damages is in dispute, the court might require that the case go to arbitration.

Contact an Experienced Business Dispute Litigation Attorney

If you’re facing a business dispute, it’s critical to have an experienced business law attorney on your side who can help you navigate the litigation process. Located in Rolling Meadows, Litico Law Group provides skillful representation to business owners and entrepreneurs throughout Illinois. We welcome you to contact us by filling out our online form or call (847) 307-5942 to schedule a consultation to learn how we can assist you.

Most people think of litigation when it comes to resolving breach of contract matters — but it’s important to be aware that other options exist. Alternative dispute resolution methods such as negotiation, arbitration, and mediation can help parties in a commercial conflict settle their disagreements outside the courtroom. In many cases, these processes can be much more efficient and cost-effective than having a judge or jury determine the outcome of a breach of contract case at trial.

What Is Alternative Dispute Resolution?

Alternative dispute resolution refers to any non-adversarial and informal process of resolving conflicts outside the courtroom. Instead of litigating a case, the parties are empowered to work together to identify a solution and amicably settle the matter. In certain cases, a judge may encourage the parties to participate in ADR procedures before they proceed to trial.

Types of Alternative Dispute Resolution Used in Breach of Contract Cases

A breached contract can cause damage to your business’s reputation and bottom line. If you are facing a breach of contract matter, it’s important to have a knowledgeable attorney by your side who can fight for your rights. Litico Law Group is dedicated to serving the legal needs of business owners in Illinois in litigation and by utilizing alternative dispute resolution methods.

The first step any business owner should take if they have experienced a breach of contract is to try to resolve the matter without judicial intervention. Commonly referred to as “ADR,” alternative dispute resolution can help parties reach a resolution in a breach of contract case without the time or expense associated with litigation.

Although there may be situations where a case should be brought into court, many breaches of contract can be cured without resorting to a “win-at-all-costs” approach. ADR can be most useful in cases where the parties have an on-going business relationship that they wish to preserve. The three most common forms of alternative dispute resolution used to resolve business conflicts, including breaches of contract, include the following:

• Negotiation — Negotiation is always attempted first before resorting to any other method of resolving a dispute. Negotiations can consist of any form of communication that occurs directly between the parties without the assistance of a facilitator from the outside. Importantly, negotiation is private, efficient, and cost-effective.
• Mediation — In mediation, a neutral third party meets with the disputing parties to help them reach a mutually satisfactory settlement agreement. Mediation is an informal, flexible, private, and confidential process.
• Arbitration — While arbitration uses a neutral third party to settle a dispute, it is more formal than mediation and less formal than litigation. The arbitrator is selected by the parties to hear their arguments and evaluate the evidence to reach a determination. The process is like a mini-trial, and depending upon what the parties agree, the decision reached in arbitration may be either binding or non-binding.

The type of alternative dispute resolution used may depend upon the provisions in the contract. For instance, many contracts contain an arbitration or mediation clause that would require parties to participate in one of these processes before they can bring a lawsuit. If attempts at ADR have been unsuccessful, it may be necessary to proceed to litigation.

When Should Alternative Dispute Resolution Be Used to Resolve Breaches of Contract?

A breach of contract can interrupt business operations and impact a company’s bottom line. Significantly, one of the most crucial components to consider in determining whether a case should be brought into court is the amount of damages suffered — as well as those which would be recovered. If the damages are nominal, pursuing litigation may not be worth the time and expense. In such cases, ADR can be a better option.

ADR might also be the best method of settling a breach of contract if the parties hope to continue working together in the future. Parties can discuss their concerns and reach a decision focused on compromise. Since both parties are involved in the dispute resolution process, they are more likely to be satisfied with the result, which can help to keep a business relationship intact. In contrast with litigation, ADR can also keep business interruptions at a minimum.

In order for ADR to be effective, both parties must be willing to participate in the process and work together to reach a compromise. If this is possible, ADR can help business owners move forward much more quickly with settling their dispute. They can also help minimize the risk of reputational harm to their company.

There can be disadvantages to using certain forms of ADR in a breach of contract case. For example, with arbitration there is limited discovery — and depending upon whether an arbitration decision is binding or non-binding, the parties may have no other recourse to pursue. In contrast, the non-prevailing party in litigation may have a right to appeal if a procedural error was made. Additionally, both mediation and arbitration can still result in a substantial expense with no certainty that the matter will be resolved.

Contact an Experienced Illinois Business Attorney

A breached contract can cause damage to your business’s reputation and bottom line. If you are facing a breach of contract matter, it’s important to have a knowledgeable attorney by your side who can fight for your rights. Located in Rolling Meadows, Litico Law Group is dedicated to serving the legal needs of business owners in Illinois for a wide variety of matters, both in litigation and by utilizing alternative dispute resolution methods. We welcome you to contact us by filling out our online form or calling (847) 307-5942 to schedule a consultation to learn how we can assist you with reaching your business goals.

A breach of contract lawsuit can result in significant financial losses for a company, as well as reputational harm, and other damages that are difficult to quantify. Fortunately, a wide variety of damages are available to an aggrieved party who prevails in a breach of contract lawsuit. Depending upon the specific facts and circumstances of the case — and the terms of the contract — remedies can include compensatory damages, specific performance of the contract, liquidated damages, consequential damages, restitution, and rescission.

Compensatory Damages

Compensatory damages, also known as money damages, are one of the most common remedies sought in a breach of contract lawsuit case. This form of damages typically equals what the plaintiff would have received if the other party had not breached the contract. Lost profits can also be awarded if they can be estimated with reasonable certainty.

Specific Performance

A breach of contract can cause your business to suffer significant financial harm. If you have entered into a contract with a party who refuses to uphold their end of the bargain, it’s important to have a skilled attorney by your side who can fight for your rights. We welcome you to contact us to learn how we can assist you with achieving your business objectives.

Specific performance may be ordered by a court in a breach of contract case. This means a judge would order the breaching party to carry out the terms of the contract and perform what they had agreed. This remedy works best in cases where the goods or services are unique, and an award of money damages would be inadequate.

Liquidated Damages

Many contracts contain a liquidated damages clause that specifies the non-breaching party’s remedy if one of the parties breaches the terms of the contract. In other words, liquidated damages are a predetermined amount of money that must be paid by the breaching party for failure to perform under the contract.

Consequential Damages

Consequential damages are those that cover any loss incurred because of the breach of contract due to conditions that are not ordinarily predictable, including indirect damages. Also known as special damages, this remedy is less common than compensatory damages, but can be awarded in appropriate situations.

Restitution

When restitution is awarded in a breach of contract case, the non-breaching party is restored to the position they were in prior to the breach. Not to be confused with an award of compensatory damages, restitution does not include compensation for lost profits or other monetary losses caused by a breach. Rather, an award of restitution focuses on the benefit the defendant received at the expense of the plaintiff and prevents unjust enrichment. Restitution is commonly sought when a contract is entered into as a result of fraud, coercion, undue influence or mistake. It is also a remedy in cases where a contract was voided due to a defendant’s incapacity or incompetence.

Rescission of the Contract

Rescission is an equitable remedy that is used in breach of contract cases. This remedy allows for the termination of a contract entered into as a result of misrepresentation, fraud, or any action by the defendant that might constitute undue influence or unconscionability. It can also be used in cases where the legality of the bargain is called into question.

Punitive Damages

Punitive damages are rarely awarded in breach of contract cases in Illinois. Typically, they are only available in cases involving malice, wantonness, and oppression. This form of damages is not meant to compensate a plaintiff for their losses — they are meant to punish the wrongdoer and deter others from engaging in similar conduct.

Injunctive Relief

Similar to specific performance, an injunction is a commonly sought remedy in breach of contract cases. Once an injunction is issued, the breaching party is ordered to do something — or refrain from taking a particular action. An injunction may be a permanent or temporary remedy. For instance, an injunction may be ordered at the outset of a case, pending the outcome of the matter. A permanent injunction may be issued as part of the judge’s final ruling in the lawsuit.

Importantly, to be granted injunctive relief, a party will generally be required to show that there is a substantial likelihood of irreparable injury if the injunction is not issued. They must also demonstrate that the injuries suffered would outweigh any losses the other party would experience due to the injunction.

Contact an Experienced Illinois Breach of Contract Attorney

A breach of contract can cause your business to suffer significant financial harm. If you have entered into a contract with a party who refuses to uphold their end of the bargain, it’s important to have a skilled attorney by your side who can fight for your rights. Located in Rolling Meadows, Litico Law Group is dedicated to serving the legal needs of business owners in Illinois for a wide variety of matters, including those involving breaches of contract. We welcome you to contact us by filling out our online form or calling (847) 307-5942 to schedule a consultation to learn how we can assist you with achieving your business objectives.

Companies that use non-compete agreements and restrictive covenants should be familiar with several recent changes that occurred in Illinois law. While the Illinois Freedom to Work Act previously only applied to non-compete agreements for low wage workers earning less than $13 per hour or minimum wage, a new amendment has created a higher compensation threshold. Notably, the changes impose various new challenges for employers and can significantly limit their ability to bind employees to these types of agreements.

What Is a Non-Compete Agreement?

If you own a company, it’s crucial to ensure all your employment contracts comply with the new laws. It’s best to have an experienced business law attorney by your side to advise you regarding these matters. Litico Law Group is dedicated to serving the legal needs of business owners and entrepreneurs in Illinois. We welcome you to contact us to schedule a consultation to learn how we can assist you.

A non-compete agreement is a contract entered into between an employer and employee where the employee agrees not to work for a competitor during their employment with the company, or for a period of time thereafter. These types of agreements are typically entered into at the beginning of an employment relationship.

The contents of a non-compete agreement can vary, depending on the type of company. However, it usually prohibits an employee from working for a competing company, forming a competing company, or developing competing products. Additionally, such an agreement might prevent an employee from recruiting their former coworkers and colleagues to join the new business — this can also be addressed in a non-solicitation agreement.

What Is the New Illinois Law Regarding Non-Compete Agreements?

Business owners should be aware of a new law that went into effect in the beginning of 2022 that restricts the use of non-compete agreements in Illinois. Pursuant to the Freedom to Work Act, employers are prohibited from entering into a non-compete agreement with an employee, unless their annual earnings exceed $75,000. This amount will increase to $80,000 in 2027 and will continue to increase by $5,000 every five years until 2037. The law specifies that any “covenant not to compete” entered into that fails to meet the earnings threshold will be deemed void and unenforceable.

Under the terms of the Act, a “covenant not to compete” is one that restricts an employee from performing work for another employer for a specified period of time or in a specified geographical area. The definition also includes work performed for an employer similar to work for the employer who is a party to the agreement — and any terms that would impose adverse financial consequences on the former employer for engaging in competitive activities after termination.

The updated law also imposes restrictions on non-solicitation agreements entered into after January 1, 2022. Non-solicitation agreements are restrictive contracts that prohibit an employee from soliciting their former company’s employees or clients. Critically, Illinois employers are now prohibited from entering into these types of agreements with employees who make a salary of less than $45,000 per year. This threshold increases to $50,000 in 2027 and goes up to $52,500 in 2032.

Considerations for Employers

Although the amendment to the Freedom to Work Act has resulted in some sweeping changes for employers, it’s important to understand that the new law does not apply to certain agreements. The Act is not applicable to confidentiality agreements, agreements prohibiting the disclosure of trade secrets, or restrictive covenants in connection with a business acquisition. In addition, non-compete agreements are generally prohibited in the construction industry and individuals covered by collective bargaining agreements. However, individuals who are shareholders or partners in a construction company may be asked to sign a non-compete.

Illinois employers should also be mindful of the following when drafting non-compete and non-solicitation agreements:

• A restrictive covenant must be supported by a legitimate business interest based on the totality of the facts and circumstances. Factors that might support the use of a non-compete can include the employee’s exposure to the employer’s relationship with customers, the near permanence of these relationships, and the employee’s knowledge of confidential information.
• Employers may not enter into a non-compete or non-solicitation agreement with any employee terminated due to COVID-19 unless the agreement provides compensation equal to the employee’s base salary at the time of termination for the enforcement period — minus any compensation earned through their subsequent employment.
• Courts may have the discretion to reform or sever non-compete and non-solicit provisions instead of rendering them wholly unenforceable. Accordingly, using a blue penciling provision is critical in any restrictive covenant agreement.
• Employees must be given at least 14 calendar days to review a non-compete or non-solicit agreement and consult with counsel if they wish. If an employer fails to comply with this requirement, the agreement will be considered illegal and void.

Non-compete and non-solicit agreements are illegal and void if the employee does not receive adequate consideration and the agreement is not supported by a valid employment relationship. The covenant must also not be greater than required to protect a legitimate business interest and cannot impose an undue hardship on the employee.

Contact an Experienced Illinois Business Law Attorney

If you own a company, it’s crucial to ensure all your employment contracts comply with the new laws. It’s best to have an experienced business law attorney by your side to advise you regarding these matters. Located in Rolling Meadows, Litico Law Group is dedicated to serving the legal needs of business owners and entrepreneurs in Illinois. We welcome you to contact us by filling out our online form or calling (847) 307-5942 to schedule a consultation to learn how we can assist you.

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Options for Resolving Partnership Disputes

Breaches of contract are some of the most common business disputes that can arise. Since agreements are central to every business transaction, nearly every entrepreneur will face this type of claim at some point. Putting an agreement in writing is crucial to outlining the parties’ responsibilities and obligations, but it doesn’t always guarantee that a party will satisfy them. Some parties might intentionally disregard their contractual duties — others may have a viable defense. It’s crucial for business owners to understand whether they have valid defenses in breach of contract claims. Illinois law recognizes a number of defenses in breach of contract claims, including the following:

Ambiguity

If you’ve been served with a lawsuit for breaching a contract, it’s essential to have a knowledgeable business attorney from Litico Law Group by your side who can help you navigate the process and protect your rights. We are committed to helping entrepreneurs and small business owners in Illinois with a wide variety of legal issues, including defenses in breach of contract claims.

Although ambiguity is not a formal defense to a breach of contract claim, a defendant in such a case might still be able to argue that the language used in the agreement isn’t clear. To resolve these types of claims, a court would look to the entire contract to clarify what the intentions of the parties were in drafting the provision. If the court still cannot determine the ambiguity, parol evidence may be admissible to determine the meaning.

Parol evidence is any agreement that is not contained within the four corners of the written contract. While these agreements are usually inadmissible, a court might permit the introduction of evidence of fraud, duress, or mutual mistake to establish the existence of grounds that would result in the contract being void.

Duress or Economic Duress

A defendant may be entitled to raise the affirmative defense of duress if they can show that the plaintiff induced them into entering the contract by threat. Duress may also be asserted if the plaintiff’s conduct was morally wrongful or illegal. Similarly, economic duress — also referred to as “business compulsion” may be a defense when the business owner is deprived of exercising their own free will due to fear of economic hardship caused by the plaintiff.

Failure to Satisfy a Condition Precedent

A condition precedent is an event that must be performed before a contract can become effective or a party is obligated to perform in accordance with the terms of the agreement. If the condition precedent is not met, a defendant may be able to use the non-occurrence as a defense to a breach of contract claim.

Fraud

Fraud can be a defense to a breach of contract claim when the defendant can establish that the plaintiff made a false statement concerning a material fact — and they reasonably relied upon it to their detriment when entering into the transaction. In such instances, a contract would not be enforceable by law.

Illegal Purpose

A contract that was entered into for the purpose of carrying out illegal activity is void from the outset. This defense may be used in cases where the contract terms violate state or federal law, as well as public policy.

Infancy

Although a contractual agreement entered into by a person under the age of 18 is not automatically void, it is voidable upon election of the minor once the age of majority is reached. However, such a contract is ratified once the defendant reaches the age of majority if they do not dis-affirm it within a reasonable amount of time — or they take action to show they intend to affirm the contract.

Mental Deficiency or Illness

A defendant may assert the defense of mental illness or deficiency as a defense to contract formation. This defense can be used if the defendant was suffering from a mental condition that rendered them unable to understand the nature of the transaction at the time it was entered into. When a mental deficiency alone is not enough to void a contractual agreement, the defense may be strengthened by showing there was undue influence, fraud, or concealment.

Mutual Mistake

A mutual mistake may exist if both parties had mistaken beliefs that certain facts were true at the time the contract was formed. A defendant may have a valid claim for a breach of contract if the agreement did not reflect the parties’ true agreement and one failed to perform.

Statute of Frauds

Under Illinois law, certain types of contracts must satisfy the statute of frauds. This means that the contract must be in writing in order for it to be enforceable. Such contracts include those where one party promises to pay for the debt of another, agreements that cannot be performed within one year, or those involving the sale of a business under the Business Opportunity Sales Law of 1955. In addition, contracts for the sale of goods in the amount of $500 or more are governed by the UCC’s statute of frauds.

Unclean Hands

A defendant may assert the defense of unclean hands when the plaintiff committed either misconduct, fraud, or bad faith.

Unconscionability

The defense of unconscionability can be raised in Illinois when a contract is unconscionable procedurally because the defendant did not have the opportunity to understand its terms or critical terms were embedded in the fine print. A contract might also be deemed unconscionable substantively if the terms are overly one-sided and a reasonable party would not agree to the terms. These types of contracts are not enforceable.

Impossibility of Performance

Also referred to as a “legal impossibility,” the defense of impossibility can be used when contractual performance would be objectively impossible by operation of law. The doctrine of impossibility can also be asserted if unanticipated circumstances made the performance of the contract vitally different from what was agreed to between the parties.

Contact an Experienced Illinois Business Attorney

If you’ve been served with a lawsuit for breaching a contract, it’s essential to have a knowledgeable business attorney by your side who can help you navigate the process and protect your rights. Located in Rolling Meadows, Litico Law Group is committed to helping entrepreneurs and small business owners in Illinois with a wide variety of legal issues, including breach of contract matters. We welcome you to contact us at (847) 307-5942 to schedule a consultation to learn how we can help.

In business litigation, monetary damages do not always address the full extent of a plaintiff’s damages. Illinois courts may award equitable remedies in lieu of — or in addition to — a legal remedy. Although a legal remedy may be appropriate to address the financial harm suffered by a plaintiff, an equitable remedy can compel a person to take certain action, or refrain from engaging in specific conduct. Whether you have commenced a lawsuit for a breach of contract, fraud, or another business dispute, an equitable remedy might be awarded in the event a legal remedy cannot adequately resolve the defendant’s wrongdoing.

Equitable Remedies for Illinois Business Matters and Contract Disputes

If you’re facing a business dispute, it’s crucial to have the representation of a knowledgeable business dispute attorney to ensure the best possible outcome in your case. Litico Law Group is dedicated to serving the needs of business owners in Illinois and strives to achieve positive results in every matter.

Equitable remedies are extremely common in breach of contract matters. In addition to the typical legal remedies, various equitable remedies may be available when a party refuses or fails to perform in accordance with the terms of a contract. For instance, specific performance may be ordered when money damages are not sufficient to compensate a plaintiff for a breach. This remedy is usually imposed by a court when the goods or services are unique and there is no other type of remedy that would be adequate.

Other equitable remedies in Illinois business disputes and breach of contract cases may include contract rescission, contract reformation, injunctions, and constructive trusts. The type of remedy imposed will depend upon the circumstances of the case and the harm suffered by the plaintiff.

Types of Injunctions in Illinois Business Matters

One of the most common equitable remedies for Illinois business disputes involving a breach of contract is an injunction. Depending on the facts of the case, an injunction may be issued at the beginning of a lawsuit — or the conclusion of one. Specifically, there are three types of injunctions that may be imposed by a court, including the following:

• Permanent injunctions — A permanent injunction may be granted if the party seeking it can establish they have a clear right in need of protection and they are likely to suffer irreparable harm without relief. They must also demonstrate that no adequate remedy at law exists, and they are likely to prevail on the merits of the claim.
• Preliminary injunctions — A preliminary injunction may be issued if a plaintiff can show they meet the same requirements as above for a permanent injunction. However, these types of injunctions are meant to temporarily preserve the status quo while the action is pending resolution, rather than be a permanent remedy.
• Temporary restraining orders (TRO) — A TRO is an emergency remedy by which a court issues an order mandating that the defendant immediately refrain from performing a certain action until a hearing can be held. Since this is a drastic remedy, it can only be issued under exceptional circumstances and must have a definite duration.

Importantly, all three types of injunctions satisfy the irreparable injury rule. This means that in order for a plaintiff to obtain an injunction, they must show that they will suffer damages that could not be fairly compensated with monetary damages.

Constructive Trusts As Equitable Remedies

A constructive trust can be ordered by a judge as a remedy to prevent unjust enrichment by someone who has wrongfully obtained the property of another. This type of trust is referred to as a legal fiction. Rather than being created by the parties who are subject to them, they are implied by the specific facts of the case and ordered by the court. They do not contain tangible assets. Instead, they are an equitable remedy and created to ensure justice is carried out.

In business litigation, constructive trusts are typically ordered when a defendant has obtained an interest in another’s property due to fraud, a breach of fiduciary duty, or other deceptive conduct. The constructive trust is set up to resolve the unfair situation that has occurred. The trust is set up to change ownership of the property at issue. In other words, when a court orders a constructive trust, the individual or entity currently holding the property no longer owns it. They are simply holding it for the person who was wronged by the defendant’s actions.

Unlike a trust that is created for the purposes of estate planning, there is no trustee. With a constructive trust, the defendant is treated as if they were a trustee acting on behalf of the plaintiff, beginning on the date they obtained the interest in the property. A constructive trust may be ordered as a temporary measure to safeguard the property until the defendant transfers it back to the actual owner. Otherwise, it can be an ongoing trust — in the event the property was converted, an ongoing trust can allow the actual owner to retain the benefits associated with the property.

Contact an Experienced Illinois Business Dispute Attorney

If you’re facing a business dispute, it’s crucial to have the representation of a knowledgeable business dispute attorney to ensure the best possible outcome in your case. Located in Rolling Meadows, Litico Law Group is dedicated to serving the needs of business owners in Illinois and strives to achieve positive results in every matter. We welcome you to contact us at (847) 307-5942 to schedule a consultation to learn how we can assist you.

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Business Disputes FAQ

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When partners start a business together, they have the best intentions — and rarely expect conflict to arise. Unfortunately, there are many reasons partnership disputes can occur during the course of doing business. Differences of opinion, misconduct, or a partner’s disregard for their obligations are all situations that can place a business in jeopardy. If you are facing a conflict in your business, it’s essential to have a skilled partnership dispute attorney by your side who can help you achieve a favorable outcome.

What Is a Partnership?

A partnership is an arrangement entered into between two or more people to conduct business for the purpose of making a profit. It is a legal entity that is separate from the individual partners. The partners share ownership and responsibility for managing the company’s operations — but partnerships can also come with a certain amount of risk if a partner fails to act in the best interests of the company.

Notably, there are three types of partnerships from which business owners can choose, based on their goals. These include general partnerships, limited partnerships, and limited liability partnerships. Liability protection, tax implications, and operational needs should all be considered when determining the type of partnership that would be most beneficial.

Reasons for Partnership Disputes

If you are facing a partnership dispute, it’s essential to have a skilled partnership disputes attorney by your side who can help you achieve a favorable outcome. Litico Law Group offers diligent representation and high-quality legal services in Illinois for a wide array of business matters.

Partnership disputes are often complicated and can significantly disrupt a business. They can occur due to disagreements over the direction of the company, a breach of fiduciary duty, and misappropriation of assets. Other common reasons for partnership disputes can include the following:

• Fraud
• Disagreements regarding sale of the partnership
• Breach of contract
• Violation of non-compete agreement
• Misuse of trade secrets
• Violation of non-solicitation
• Authority disputes

Importantly, under the Illinois Uniform Partnership Act, partners can be held jointly and severally liable for the partnership’s obligations. Since each partner is independently liable for damages incurred in connection with another partner’s tortious act, disputes can become extremely contentious.

How Can Partnership Disputes Be Resolved?

Because there is so much at stake, partnership disputes can place a business in peril. It’s crucial to ensure these types of conflicts are handled as quickly as possible to avoid disruption to a company and damage to its bottom line. Apart from pursuing litigation, there are several ways partnership disputes can be resolved.

Mediation

Depending on the facts and circumstances, mediation may be able to help resolve a partnership matter efficiently and cost-effectively without having to resort to litigation. This is a form of alternative dispute resolution that takes place outside the courtroom and utilizes a neutral third-party to facilitate communication between business partners. Agreements reached during mediation are typically binding on the parties involved and can also help to preserve the business relationship in the event the partners choose to move forward with operations.

Buy-Out

Should business partners no longer be able to work together — but they want the business to continue — one or more partners may buy out the others. If a buy-sell agreement was entered into at the time of the partnership’s formation, the procedures in the document should be followed to determine the steps that should be taken. Absent such an agreement, the business should be appraised in order for the parties to have an understanding of their interests and negotiate the best possible terms. Alternatively, if none of the partners wish to continue running the business, partners may sell-out their interests to new owners.

Dissolution of the Partnership

If it is apparent that the business relationship cannot be repaired, dissolution may be the best option to pursue. When partners voluntarily agree to end the company’s operations, dissolution can be relatively simple. Typically, the process involves filing paperwork, paying off creditors, selling any assets, and distributing proceeds in accordance with the interests of the partners. However, if not all partners wish to dissolve the business, it may be necessary to seek judicial dissolution by filing a lawsuit.

Bankruptcy

Sometimes, the financial circumstances of a business may leave no other viable option than bankruptcy. If the partnership’s debts are greater than the assets, partners may consider filing for a full liquidation under Chapter 7. In some cases, a partnership might be able to file for a debt restructuring under Chapter 13, which would allow the business to continue.

Can Partnership Disputes Be Prevented Before They Arise?

The best way to prevent partnership disputes is to prevent them before they happen. One way of doing this is by adopting a partnership agreement that clearly specifies the roles and responsibilities of each partner, as well as how profits will be distributed. The document should also address all potential scenarios that could arise, including those involving a partner’s incapacitation, intellectual property rights, and how disputes will be resolved when they occur.

Contact an Experienced Partnership Dispute Attorney

If you are facing a conflict in your business partnership, it’s essential to have a skilled business attorney or partnership dispute attorney by your side who can help you achieve a favorable outcome. Located in Rolling Meadows, Litico Law Group offers diligent representation and high-quality legal services in Illinois for a wide array of business matters, including partnership disputes. We welcome you to contact us at (847) 307-5942 to schedule a consultation to learn how we can assist you.

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Are Non-Compete Agreements Allowed in Illinois?

When a party enters into a business deal with another individual or company, it’s always best to have an enforceable contract in place. But in cases where a written agreement does not exist — or a contract is not legally enforceable for some reason — damages may still be recoverable if a party refuses to pay for the work that was performed. In the absence of a valid contractual agreement, a legal remedy may be sought by an aggrieved party under several legal theories, including quantum meruit, unjust enrichment, or promissory estoppel.

Raising a Claim for Unjust Enrichment

Unjust enrichment is a common cause of action brought in civil claims, such as those involving a breach of contract. It can arise in a number of situations in which a party has received a benefit to the other’s detriment. Under Illinois case law, to bring a claim for unjust enrichment, the retention of that benefit must have violated the “fundamental principles of justice, equity, and good conscience.” What makes the retention of the benefit unjust is typically due to improper conduct by the defendant.

Illinois courts are divided as to whether a claim for unjust enrichment can be brought alone or must be raised with other claims in a lawsuit. However, unjust enrichment is often asserted along with fraud, duress, undue influence, and quasi-contractual claims. Unjust enrichment is also a necessary precondition to a claim for restitution.

A constructive trust is typically the equitable remedy applied in unjust enrichment cases. By establishing a constructive trust, the court effectively imposes the duties of a trustee on the defendant and requires them to transfer property to the party who was supposed to receive it. While constructive trusts are not created by courts based on a violation of an agreement, they are imposed by a court when it is deemed fair.

Business relationships are largely based on trust. If you have relied on another party’s promise to your detriment and suffered damages, it’s important to have a knowledgeable attorney by your side who can advise you regarding your legal rights and remedies. We invite you to contacts us.

Bringing a Cause of Action for Quantum Meruit

Closely related to unjust enrichment is the legal doctrine of quantum meruit. Translated from the Latin for “as much as he deserves,” the theory is also based on the principles of justice and fairness. Specifically, it allows a party to recover compensation for the services they carried out, even if there was a contractual defect that makes suing for a breach of contract claim impossible.

A quantum meruit claim can be brought if the following elements are met:

• The plaintiff performed a service for the defendant’s benefit
• The service was not performed gratuitously
• The defendant accepted the services rendered by the plaintiff
• There was no contract that addressed payment for the services

Quantum meruit recovery is measured by the “reasonable value of work.” Even if a contract was executed between the parties, asserting this claim can help to ensure the plaintiff is paid in the event the agreement is unenforceable. In addition, a claim for quantum meruit may also exist when the work performed by the plaintiff is outside the scope of the contractual terms.

Suing Under the Theory of Promissory Estoppel

The theory of promissory estoppel applies in cases where one party makes a promise that the other relies on to their detriment. The elements required to plead promissory estoppel in a lawsuit include: (1) an unambiguous promise; (2) the plaintiff’s reliance on the promise; (3) the defendant expected or foresaw the plaintiff’s reliance on their promise; and (4) the plaintiff relied on the promise made by the defendant to their detriment.

It’s always a good idea for a business owner to have a contract in writing to protect their interests. However, promissory estoppel is a mechanism that can help ensure a legal remedy is obtained in the absence of an enforceable agreement. In fact, this claim can only be made when no express contract exists — and there is no contractual consideration. Instead, promissory estoppel serves as a substitute for the consideration that would have been specified in the terms of the contract.

Contact an Experienced Business Attorney in Illinois

Business relationships are largely based on trust. If you have relied on another party’s promise to your detriment and suffered damages, it’s important to have a knowledgeable attorney by your side who can advise you regarding your legal rights and remedies. Located in Rolling Meadows, Litico Law Group provides skillful counsel and dedicated legal services in Illinois for a wide variety of business disputes, including those involving claims for unjust enrichment, quantum meruit, and promissory estoppel. We welcome you to contact us at (847) 307-5942 to schedule a consultation to learn how we can help.

A breach of contract is a common business dispute that can cause your company to suffer significant economic harm. It can also have a devastating impact on your company’s reputation and future. Unfortunately, it often happens during the course of doing business that a party fails to uphold their contractual obligations — either intentionally, accidentally, or due to circumstances beyond their control. In such cases, the non-breaching party may be able to take legal action and recover their monetary damages.

When is a Contract Formed Under Illinois Law?

To recognize a breach of contract, it is imperative to first understand when and how a contract is formed. Under Illinois law, a contract can be written or verbal. Regardless of whether the agreement was entered into orally or in writing, three elements must be met to create an enforceable contract. These include the following:

(1) An offer — An offer is made when one party promises to perform or give something in exchange for another party’s performance.

(2) Acceptance of the offer — An offer is accepted when the offeree objectively assents to the terms proposed by the offeror and communicates an intent to be bound.

(3) Consideration — Consideration is the benefit each party receives as a result of entering into the deal.

If the above criteria are satisfied, the law presumes that a valid contract has been formed. Common types of contracts in business can include employment and partnership agreements, non-compete agreements, leases, vendor contracts, utilities contracts, indemnity agreements, and equipment leases. However, a contract can only be legally formed when the bargained-for-exchange is lawful — illegal contracts will not be upheld by a court.

When Can You Bring a Lawsuit for a Breach of Contract?

A breach of contract occurs when one party breaks its promise or refuses to comply with the terms to which they agreed. However, a contract need not be breached in its entirety for the non-breaching party to commence a lawsuit for the damages they suffered. There are many different ways a contract can be breached — a breach of contract can be material, minor, anticipatory, or actual.

A material breach of contract occurs when a party fails to carry out the fundamental terms of the contract. These types of breaches can arise when the non-breaching party receives something different from what was agreed upon. In contrast, a partial breach only affects a minor portion of the contract, rather than its main purpose. An example of a partial breach would be meeting the demands of the contract but completing the obligations a day late.

A breach of contract can fall into one of two categories. An “actual breach,” means that a party refused to fully perform the terms set forth in the contract. An “anticipatory” breach occurs when a party conveys through their words or actions in advance that they will not be able to meet their contractual obligations. In either case, the non-breaching party may be entitled to a legal remedy.

Importantly, before you can bring a lawsuit in court, you must, in some situations, provide the party who failed to perform with notice and an opportunity to cure the breach. Typically, a contract will include a provision specifying a cure period and the conditions. Additionally, in the event the non-breaching party learns that the other party will not be performing, they are required to mitigate their damages to prevent further loss.

What Happens if a Contract is Breached?

Contracts can be complex, and a party may breach a contract without realizing it. Or, they might have a valid reason for the breach. There are a number of defenses that can be asserted to excuse a party’s non-performance. Each defense is fact-specific, depending upon the circumstances surrounding the breach.

Some common defenses to a breach of contract include the following:

• Mutual mistake — A contract may be unenforceable if there was a mutual mistake as to an essential fact in the contract.
• Indefinite terms — If terms are missing or indefinite, a court may render a contract unenforceable.
• Fraud — If a party entered into a contract based on misrepresentation or fraudulent inducement, the agreement will be deemed invalid.
• Unconscionability — A contract that is grossly unfair or extremely one-sided may be deemed unconscionable and unenforceable.
• Lack of capacity — All parties must be mentally competent at the time the agreement is made. A contract can be voided if any party lacked capacity.
• Illegality — A contract executed for an unlawful purpose is illegal and void.
• Impossibility — A breaching party may be excused from performance if there were circumstances beyond their control that prevented them from doing so.

If a defense is unsuccessful and the non-breaching party prevails in a lawsuit, they may be entitled to recover their monetary damages. Other remedies can include rescission, specific performance, injunctive relief, restitution, and liquidated damages. But there may also be some instances in which the breaching party might also be able to recover damages, such as when certain legal defenses exist — or if they substantially performed under the contract.

Contact an Experienced Illinois Business Attorney

If you’re facing a breach of contract matter, it’s vital to have a knowledgeable business attorney by your side who can protect your legal rights and advocate on your behalf. Located in Rolling Meadows, Litico Law Group is committed to assisting entrepreneurs and small business owners in Illinois with a wide variety of legal issues, including contract disputes. We welcome you to contact us at (847) 307-5942 to schedule a consultation to learn how we can help.

When you’re an entrepreneur, business disputes are inevitable. Unfortunately, when they arise, they can result in significant harm to your company and its bottom line. If you’re facing a business dispute — or you simply want to be prepared for any potential conflicts — you likely have many questions. Below are some of the most frequently asked questions of a business dispute law firm regarding business disputes.

Contact a Knowledgeable Illinois Business Dispute Law Firm

No matter what type of business dispute you’ve encountered, it’s essential to have the representation of a skilled business attorney who can protect your legal rights and financial interests. Located in Rolling Meadows, Litico Law Group is committed to serving the needs of entrepreneurs and small business owners in Illinois. With a focused commitment to assisting clients with achieving their objectives, we strive to reach positive results in every case. We welcome you to contact us at (847) 307-5942 to schedule a consultation to learn how we can assist you.

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If you’re in a business partnership, whether as a partner, shareholder, or member, and you suspect your partner is stealing, embezzling, or otherwise cheating the company, take actions to enable yourself to prove it. Save all financial data that you can. Have access to the company QuickBooks file? Download it, and keep the file somewhere safe. The same goes for bank account statements and credit card statements. Save tax returns, payroll records, invoices, and receipts. If you confront your partner, he or she could, even if illegally, revoke your access to these documents or even to the business generally. Your partner may also start to cover his or her tracks. It’s wise to develop a plan with your attorney before you raise the issue.

Beyond securing accessible records, you should work with your attorney to develop a strategy for rectifying the problem. Tools at you and your attorney’s disposal include statutorily-protected demands for documents, corporate actions to end the misappropriation, forensic accounting audits, removal of the partner, or a fair value buyout of your interest in the company. In some cases, these matters are resolved through negotiation. In others, lawsuits are ultimately necessary.

When partnership problems become apparent, seeking your attorney’s help immediately generally pays dividends in the long run. Self-help early in disputes can create expensive problems to solve in litigation.

The defendants owned 52% of the business at issue, Twin Bay Village, and the plaintiffs owned 48%. The plaintiffs’ involvement in the business was limited, at least recently, and the defendants ran the business, which had been in the family since 1957.

The defendants:

• held a shareholder meeting in 2001 without notifying the plaintiffs and passed a corporate resolution awarding themselves $80,000 per year bonuses, untied to their performance or that of the company, despite the fact the corporation had not paid dividends to its shareholders since 1995;
• issued 100 shares of stock in 2004, in addition to the 100 shares then outstanding, and then divided those purported shares between themselves without permitting the plaintiffs an opportunity to purchase additional shares, diluting the minority shareholders;
• claimed to have issued $750,000 in loans to the corporation between 2005 and 2013, which their financial evidence did not support; and
• amended the corporation’s bylaws in 2009 to state that a shareholders who had ceased to be active participants in the business could be forced to sell their shares by a majority of shareholders (such as the defendants).

In 2009, the defendants determined that the fair value of the corporation’s shares was $1,139 and demanded that the plaintiff’s sell their shares. The plaintiffs instead filed suit for shareholder oppression in the form of a breach of fiduciary duty and statutory action.

The New York court applied the reasonable expectations standard and found that the plaintiffs’ reasonable expectations that the defendants would protect the interests of all shareholders had been frustrated. The Appellate Court affirmed.

The takeaway of Chomiak is, as in many shareholder or “partnership disputes”, that when your business is organized as a corporation, you are not acting for yourself, but for the corporation and its shareholders. The fact that the controlling shareholders operate or manage the corporation does not diminish the rights of the minority shareholders.