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  • By: Jared M. Schneider, Esq.
Business professionals shaking hands, discussing torts and legal risks - Schneider Law, P.C.

In this article, you can discover…

  • Common business torts that can harm your company and their impacts.
  • When to use mediation to resolve a business dispute.
  • How an experienced attorney can help protect your business and your legal rights.

What Are Some Common Business Torts That Can Harm My Company In Indiana?

A “tort” is a wrongful act (or failure to act), other than a breach of contract, that harms another person. Most business tort cases involve a breach of fiduciary duty, where one party neglects their obligations to put others’ (typically business partners or co-owners) interests above their own.

An example of this is when one partner uses the partnership for his own gain and excludes the other partners.

Other common torts are fraud (a knowingly false statement of fact that the victim relies on to their detriment), misappropriation of a trade secret (using a business’s trade secrets for personal gain), and tortious interference with a contract (committing a tort to interfere with a contractual relationship)

While it’s not a tort, another common form of business dispute arises from a breach of contract or some other kind of business promise. It’s also not uncommon for a business owner to notice a small amount of financial misconduct and, upon investigating the issue, uncover a much larger scheme.

What Steps Can I Take To Protect Myself From Indiana Business Tort Claims Involving Vendors Or Partners?

The smartest thing a business owner can do is to conduct themselves honestly; we strongly believe that there are ways to make money in this country without taking advantage of people. If you consistently act with integrity and transparency and treat your partners, vendors, and employees well, you’re far less likely to be involved in a lawsuit.

As a business owner, be sure to disclose all important information required of you to those whom you owe fiduciary duty, such as partners or investors. To those who are not owed a fiduciary duty, such as vendors, be sure to provide the vendor only with true and accurate information. Of course, providing false or misleading information to induce a vendor to act a certain way could be considered fraud, putting you and your business at risk.

What Are The Key Differences Between Breach Of Fiduciary Duty And Fraud Claims In Indiana?

The key difference between a breach of fiduciary duty and fraud generally lies in the timing of the misconduct.

Fraud typically happens in the discussions at the beginning of a business interaction. The fraudster makes a false statement they know is untrue, which you believe and rely on, ultimately leading to harm.

By contrast, a breach of fiduciary duty usually happens within the course of an ongoing business relationship. In general, this type of breach involves the other party failing to act in your best financial interest, such as hiding important information from you or misusing shared funds for personal benefit.

Fraud, however, can sometimes occur during an established business relationship as well. For instance, if a once-legitimate investment turns unprofitable and the partner turns it into a Ponzi scheme, you could potentially claim both fraud and a breach of fiduciary duty.

Business torts typically involve complex fact patterns with lots of moving parts, so it is always a good idea to have a frank discussion with a competent business torts attorney if you suspect any type of potential misconduct.

When Is It Beneficial For Businesses To Use Mediation Or Arbitration To Resolve Tort Disputes In Indiana?

Both mediation and arbitration are more efficient in terms of time and cost than traditional litigation in court. Many business owners prefer these types of alternative dispute resolution (ADR) because the cost and time savings free up the business to continue operations more efficiently.

Of the two main types of alternative dispute resolution, mediation is less formal. A licensed mediator will work with the parties to help them come to a voluntary agreement. Everything concerning the mediation is required by law to be confidential, and there are no repercussions if the mediation is unsuccessful.

By contrast, arbitration has more structure, involves discovery and an exchange of information, and will often (but not always) result in a binding decision by the arbitrator. Both solutions can result in you saving considerable time and money compared to taking your case to trial.

Many businesses with limited resources may prefer to discuss mediation or arbitration with their business disputes attorney, as they may be viable options depending on the context and details of the dispute.

An Illustration Of Our Approach: Case Studies From The Field

While every case is different, and past performance does not guarantee future results, a recent case provides a nice illustration of our client-centered litigation strategy. Our client was (and still is) a real estate broker who had been accused of fraud, breach of fiduciary duty, and breach of contract, concerning a defect in a house that he sold.

Although our client did nothing wrong, he still felt bad that the house was defective and wanted to help. After a frank discussion of the pros and cons concerning the amount at issue and the estimated cost of litigation, we decided to offer a not insignificant portion of the loss to settle. The other side’s attorney refused, and demanded the full amount. So instead of reaching a quick and relatively painless settlement, we proceeded to litigation.

Our client had been unaware of the defect when he sold the home, and the alleged fraud (a statement about the type of material used in construction), even if false, hadn’t caused any damage. In light of this, we fought the case and filed a motion for summary judgment, arguing that the parties did not dispute the facts and we were entitled to judgment as a matter of law.

In support of this motion, we used, among other evidence, a statement from the buyers’ own expert to explain that whatever had caused the damage to the home wasn’t linked to any alleged misrepresentation.

Ultimately, we won the motion, prevailed again on appeal, and received an order requiring the buyers to pay attorney’s fees.

Here, as we strive to do in every case, we attempted to settle the matter early and favorably, in an effort to both avoid the tremendous stress and uncertainty of a lawsuit, and to follow the Gospel’s teaching that we should settle disputes before our legal adversary drags us before a judge (Luke 12:48).

However, once the other side refused to compromise, we zealously defended our client, and efficiently used all available legal tools to leverage the best possible outcome with the least amount of resources—in this case, a complete victory.

Still Have Questions? Ready To Get Started?

For more information on Business Torts In Indiana, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (812) 561-7772 today.

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