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11 Common Reasons Businesses Get Sued

— August 15, 2022

One of the main reasons why businesses may get sued is for copyright infringement. ~ Morgan Taylor, Sourcery

What is one of the main reasons businesses tend to get sued?

To help you guard your business against lawsuits, we asked legal professionals and business leaders this question for their best insights. From ignoring the small prints in contracts to making false claims, there are several actions or inactions that may constitute legal grounds for your business to get sued. 

Here are 11 common reasons businesses get sued:

  • Ignoring Or Flouting The Small Print in Contracts
  • Misclassification of Employees as Independent Contractors
  • Committing a Tort
  • Lack of Expertise
  • Customer Discrimination
  • Copyright Infringement
  • Failing to Properly Protect Customer Data
  • Workplace Accidents and Injuries
  • Breach of Contract
  • Not Registering Trademark and Patent
  • Making False Claims

Ignoring Or Flouting the Small Print in Contracts

While businesses are not always in the right, there are indeed times when they haven’t paid due attention to the fine print of the contracts they agree to. For starters, the lack of knowledge of how much leeway a contract offers you is in itself a major reason that leads to shortcomings in meeting the terms. Being unaware of the finer points also means that when the business is finally held responsible and notified of deficiencies, the news often comes as a surprise. It is therefore crucial that a business carefully reviews the small print in contracts and adheres to these terms upon acceptance to avoid lawsuits.

Riley Beam, Douglas R. Beam, P.A.

Misclassification of Employees as Independent Contractors

Misclassifying employees as independent contractors is not only against state and federal law but also puts an employer at risk of legal action. Employers frequently misclassify workers to escape paying benefits and payroll taxes. Even if a worker consents to be considered a contractor, this does not make them one by default or exclude them from bringing further legal action. Employers who fail to correctly classify their employee’s risk facing harsh fines and penalties as well as worker lawsuits.

Axel Hernborg,

Committing a Tort

A tort is an action that results in an individual being harmed, leaving a business liable for said action. This typically occurs as a result of negligence, such as when businesses sell malfunctioning products or have an unsafe working space. Businesses may be sued by customers, business partners, or their own employees in these situations.

David Aylor, David Aylor Law Offices

Lack of Expertise

One of the most common causes of business lawsuits is a lack of expertise. Many businesses find themselves in legal trouble because they simply do not have the right employees or experts for the job. For example, a business gets into a contract to build a shop floor even though they may not have the expertise to build a large store floor. After the job is completed, the floor doesn’t fulfill the contract specifications, the business owner sues to either have the floor fixed or to get out of the contract to find another company. Accidental negligence is also often caused by lack of experience and often gets businesses in trouble with the law.

Hector Ruiz, BBQ Grill Academy

Customer Discrimination

Discrimination can occur when undue surveillance is targeted toward a certain segment of the population. For example, disproportionately targeting black or Hispanic customers with in-store surveillance and other shoplifting prevention procedures. The first step to protecting your business from this type of lawsuit is to be aware of the types of discrimination that might occur and avoid it.

The most important thing any business should do is to ensure that its employees understand discrimination and train them to recognize their own biases. Many customer discrimination lawsuits do not arise not from corporate policies but rather because store employees end up profiling or discriminating against shoppers. Every business must educate its frontline teams on equal customer treatment.

Mark Daoust, Quiet Light

Copyright Infringement

One of the main reasons why businesses may get sued is for copyright infringement. Image and text copyright is probably the most common types of infringement. Every business must practice extreme diligence when using text or images as, even if they are unaware that the material they have used is covered by copyright protection, they can find themselves on the receiving end of a lawsuit. Be certain to check all material that you intend to use before publishing as the penalties for infringing someone else’s copyright can be extremely harsh and could severely impact your business. If you do intend to use someone’s work, make sure that you have a contract or written permission before proceeding.

Morgan Taylor, Sourcery

Failing to Properly Protect Customer Data

As a business lawyer, I’ve seen many businesses tend to get sued for failing to properly protect their customers’ data. Data breaches have become increasingly common in recent years, and if a business does not have adequate security measures in place, it could be held liable for any damages that occur as a result. Not only do you have to deal with the financial repercussions, but you also have to deal with the negative publicity. It’s important to make sure that your business has proper data security measures in place along with a proper privacy policy to avoid any potential legal trouble.

Amira Irfan, A Self Guru

Workplace Accidents and Injuries

Scientists Map Genome for Snake Venom to Develop Treatment Options
Photo by James Wainscoat on Unsplash

Injuries at the workplace account for a lot of hospital visits, which in turn account for a lot of lawsuits. If a client or visitor winds up getting injured on your property, you could end up coughing up significant legal fees. It isn’t just those who visit warehouses and factories who get injured.

There was one case in Virginia in which a woman was bitten by a venomous snake while inside a restaurant. That was an unexpected accident that wasn’t the result of the business being derelict, but the restaurant chain was still liable for that person’s costly hospital bills. Anti-venom is expensive and patients often have to travel by helicopter to obtain such a treatment.

The lesson is simple: Get liability insurance and get lined up with a good lawyer in case something freakish and unexpected happens at your business.

Alan Ahdoot, Adamson Ahdoot Law

Breach of Contract

Nearly everything that a business does in a professional sense is covered by a contract, and while this protects both parties in the agreement, it does leave them open to a claim for breach of contract when something goes wrong. The contract will usually stipulate what goods or services will be delivered and when, but many factors are at play in the supply of any purchases, and if a delay in delivery results in financial loss for the receiver, the option is available to sue for breach of contract.  This course of action will usually only be undertaken by other companies, private buyers tend to simply want their goods on time and if not received will often seek other methods of compensation.

Colin Palfrey, JollySEO

Not Registering Trademark and Patent

These days, getting the trademark and patent contact is the priority of every business to safeguard the business name and its products in the coming future. A Trademark marks your name in the business so that no one can use it again and a patent makes sure that no one can copy your invention except you.

With the increasing number of organizations, it’s much easier for your competitors to get you sued if you don’t have a trademark or patent signed. And it’s less of a mistake from your side and more of an opportunity for them to get you sued and remove you from the business. No competitor wants other competitors to come in the way and hence, getting the company sued in the name of patent and trademark has become extremely common. This might lead to imprisonment if the company is big. It can also lead the sued company to fill a money penalty to the owner of the trademark.

Isaac Robertson, Total Shape

Making False Claims

Businesses tend to get sued when they make claims about their product that are false. If a company is selling a product that is proven to be dangerous, then they can be sued if they have not disclosed this information to their consumers. In addition, they can also be sued if they made false claims about their product. If a company makes a claim that its product is effective or has some sort of special ability, then it should be able to prove that this is the case. If a company can’t or won’t back up its claims, then it can run into serious legal trouble!

Sukanta Sekhar Das, CoinMarketBag

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