Business and commercial litigation are terms often used interchangeably, but there are subtle differences between the two.
Business litigation involves internal disputes within entities, encompassing shareholder conflicts and contractual breaches within the business framework.
Commercial litigation widens this scope to cover transactional conflicts, including disputes in sales, finance, real estate, and broader commercial activities. Although these concepts are similar and often overlap, there are differences that you need to note if you’re involved in a dispute, especially in Texas.
Don’t navigate the legal landscape alone – enlist Massingill’s expertise to guide you through the complexities and emerge victorious in your business or commercial dispute. Contact us today.
Business Litigation in Texas
Business litigation deals with disputes intrinsic to an organization’s internal dynamics and external affiliations. Such disputes include the following:
- Internal business disputes. This refers to conflicts emerging within the framework of the business such as disagreements over management decisions, employment matters, or operational strategies.
- Shareholder issues. This includes disputes involving shareholder rights, voting powers, dividend distributions, or disputes over corporate governance.
- Partnership disputes. These disputes address conflicts among business partners regarding profit sharing, decision-making, or dissolution of partnerships.
- Breach of contracts within business operations. Addresses disputes resulting from contractual breaches including vendor agreements, service contracts, or employment contracts.
The Texas Business and Commerce Code (TBOC), provisions of the Texas Civil Practice and Remedies Code, and state contract law govern Texas business litigation. In addition to the above, different business entities in Texas may be subject to specific regulations that impact dispute resolution within its structure.
Commercial Litigation in Texas
Commercial litigation encompasses a range of disputes arising from commercial transactions, financial dealings, and property-related conflicts. These disputes include:
- Commercial transactions. Deals with conflicts stemming from various commercial activities, including contracts, agreements, and dealings between businesses, suppliers, customers, and partners.
- Disputes in sales and acquisitions. Commercial litigation also covers disagreements arising from sales contracts, mergers, acquisitions, and other transactions involving the transfer of ownership or assets.
- Banking, finance, and insurance. Legal conflicts involving financial institutions, banking practices, lending agreements, insurance claims, and coverage disputes fall under this category.
- Real estate and property-related disputes. Addresses disputes over property transactions, leases, zoning issues, title disputes, construction contracts, and landlord-tenant disagreements.
Texas governs commercial transactions through the TBOC and the Uniform Commercial Code (UCC), which provide aligned guidelines and principles for contract formation, sales of goods, negotiable instruments, and secured transactions. In addition, there may be other specific statutory provisions addressing sales, leases, and commercial contracts.
Business vs Commercial Litigation
So, what is the real difference between commercial litigation and business litigation? The first significant difference is the nature of the disputes each tackles.
Business litigation in Texas primarily deals with conflicts arising within the internal structure of a company like management decisions, shareholder disputes, or breaches of contract. In contrast, commercial litigation has a broader scope, handling disputes arising from external business transactions such as contract breaches, sales, financial disagreements, and real estate disputes.
An attorney specializing in business litigation possesses expertise in corporate law, governance, and internal business disputes. In contrast, those who handle commercial litigation should be familiar with contract law, trade regulations, and diverse commercial transactions. In addition, commercial litigators may be experts with industry-specific laws, such as oil and gas attorneys.
Courts That Handle Business Disputes
For the most part, Texas’s district and county courts handle business disputes, unless the parties decide to utilize an Alternative Dispute Resolution (ADR) method. However, on September 1, 2023, a significant addition to Texas’s legal landscape came into effect with the creation of Texas’s business courts.
This court will address complex business litigation matters and have original jurisdiction, concurrent with district courts, over certain actions subject to a $5 million minimum amount in controversy. These claims include:
- Derivative actions;
- Disputes over an organization’s governance, governing documents, or internal affairs;
- Claims arising from state and federal securities or trade regulation laws;
- Actions by an owner or organization against an owner of the organization acting in that capacity;
- Actions alleging that an owner or control person breached a duty owed to the organization;
- Actions alleging an owner’s liability for an organization’s debts; and,
- Actions arising under the TBOC.
Texas’s business courts will begin hearing cases on September 1, 2024.
Business and Commercial Litigation Overlap
There are instances where a single dispute involves elements of both business and commercial litigation. For example, a dispute between business partners over the company’s management might include contractual obligations to external vendors or clients.
Additionally, an employment dispute such as a discrimination or wrongful termination claim might negatively impact a project with a client, leading to a commercial dispute. Navigating the complexities between internal business conflicts and external commercial transactions requires an understanding of Texas’s business and commercial litigation frameworks.
When to Call a Texas Business and Commercial Litigation Attorney
If you’re involved in a commercial or business dispute, it is essential to seek the advice of an experienced Texas attorney as soon as possible. It is especially important if the dispute is complex and combines aspects of both areas of law.
An experienced attorney can assess potential risks and liabilities, negotiate with other parties on your behalf, and prepare your case for litigation if necessary. Ultimately, the right attorney will be your advocate throughout what can be a stressful and difficult process.
Trust the Texas Business Law Attorneys at Massingill
Texas is a unique state that requires local expertise. If you are facing a business or commercial issue and don’t know where to turn, the business law attorneys at Massingill are here to help.
With years of experience obtaining successful results for our clients in the Lone Star State, you can trust our team to simplify the complex and guide you throughout the legal process. Whether through negotiation or litigation, we have the skills to help our clients achieve the best possible outcome.
To schedule a consultation to discuss your case, fill out our online contact form or call us.
Where You Can Find Our Austin, TX Office
Joshua Massingill
Joshua Massingill is an attorney practicing in Austin, Texas. He serves on the Texas State Bar’s Law Practice Management Committee, the Leander Educational Excellence Foundation (LEEF) Board of Directors, and the Success-Werx Board of Advisors. He mentors young entrepreneurs in Leander ISD’s INCubatorEDU program and is active in his church.
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