Common Causes of Business Disputes in Mississippi

Business disputes should be expected at some point in a company’s life cycle. The ability to settle differences quickly and move on in a stronger position for the future is an important differentiator between successful businesses and the rest.

That’s not always easy to do. Business disputes and legal challenges can arise for many reasons and may drag on, sapping resources, finances, and energy.

So, how can you be better prepared for such eventualities to avoid costly, time-consuming disputes from impacting your business?

Let’s start by considering the common causes for disputes, the legal framework for dispute resolution in Mississippi, and how you can protect your business from complex legal challenges.

The most common reason for business litigation in Mississippi is breach of contract. This is when one party fails to honor the terms of a written or verbal agreement.

Typically, breach of contract involves the failure to deliver or pay for goods or services, meet deadlines, or fulfill other contractual obligations. This is separate from fraud, which involves intentional deception and has different legal remedies (see below).

In Mississippi, business contracts are generally enforceable by the courts if they include the following elements:

• An offer: A clear and definite proposal by one party showing intent to be bound if accepted.
• Acceptance: The unambiguous agreement to the exact terms of the offer, creating mutual assent.
• Consideration: The exchange of something of legal value (a benefit or detriment) between the parties.
• Clear terms: The contract’s essential terms must be definite enough for a court to determine obligations and remedies.

For instance, if a supplier is legally contracted to deliver materials by a particular date and fails to meet this contractual obligation, the injured business can sue for damages, specific performance, or cancellation.

As per the Mississippi Supreme Court, business owners have the right to recover actual damages as well as lost profits. The burden of proof lies with the injured party.

Other common examples of breach of contract include:

• A client refusing to pay for work that has been completed as contracted.
• A vendor who violates an exclusivity agreement.
• A contractor who fails to complete the work agreed upon.

In the majority of cases, contractual disputes can be settled without a trial, through negotiation or mediation.

Another common cause of business disputes in Mississippi is partnership or shareholder disagreements. These types of disputes can be challenging to resolve because emotions often run deep and strong opinions may be involved, especially with family-run businesses or partnerships between long-term business colleagues.

Co-owners or partners can disagree over the strategic direction of the business, financial practices, management responsibilities, or other matters. Most commonly, cases involve the following types of contested issues:

• Allegations of misuse of company funds or property.
• Lack of company progress due to voting deadlocks over strategic decisions.
• An alleged breach of fiduciary duty (the legal obligation to act in another’s best interest).
• Disagreements over salaries or reinvestment.

Partnership and shareholder disputes may end up in court but can also be resolved before litigation becomes necessary, through collaboration between lawyers, mediation, or arbitration. Typical remedies include forced buyouts, dissolution of the business, and injunctions to prevent the misuse of assets, etc.

Unpaid invoices and slow-paying clients impact business cash flow and can lead to operational difficulties for a business. Serious payment delays can end up in court but, with the help of seasoned business lawyers, that can often be avoided through alternative dispute resolution methods.

Non-payment and accounts receivable disputes often relate to:

• The failure to pay for services provided.
• Disputed charges after the receipt of goods/services.
• Returned checks or refused payments.

Note that, for business debts owed in Mississippi, a three-year statute of limitations applies to lawsuits. There is no time to lose if a dispute has already dragged on for a while, with invoices and demand letters ignored. After the three years have expired, the injured party waives the right to file suit.

Another of the main types of business disputes in Mississippi is fraud or misrepresentation in business deals.

Fraud cases usually involve the intentional misrepresentation of material facts to induce another party into a business deal. The element of deception distinguishes fraud cases from breach of contract. Such cases are usually handled more harshly by the courts, with punitive damages often awarded if fraud is proven.

To prove fraud in Mississippi, a plaintiff must show a false representation, knowledge of its falsity, an intent to deceive, justifiable reliance by the plaintiff, and resulting damages.

Some common examples of fraud cases include:

• A vendor lying about the quality or capabilities of a product.
• Falsification of financial statements by the seller of a business.
• A buyer failing to reveal the true purpose of an acquisition.

Almost any company, from sole proprietors and subcontractors to major corporations, can become involved in a business dispute.

All companies must interact and trade with other businesses and must normally draw up a range of contracts throughout their existence, so the potential for disagreements is high, especially if preventative measures have not been taken (see below).

Litigation is one avenue available to resolve business disputes. However, trials are rarely in the best interests of either party, so most business disputes are resolved before that stage through the types of alternative dispute resolution methods already mentioned.

If the matter ends up in the Mississippi courts, contracts can be enforced and cases resolved judicially using a variety of legislation and case history. Depending on the dispute type, the main legislation that governs business disputes here is:

• Mississippi Code Annotated Title 75 and Title 79: for business contracts.
• Code Ann. § 15-1-49: Statute of limitations for breach of contract.
• Mississippi Rules of Civil Procedure.
• Federal law: for fraud and multi-jurisdiction disputes.

When no written agreement exists or a specific issue has been omitted from the contract, the courts adopt either the appropriate legislation or, in its absence, common law principles.

Justice, county, and circuit courts can hear business disputes in Mississippi. Your lawyer will advise you of your options for the venue, legal strategy, and possible legal remedies for the dispute.

Business litigation should only be necessary as a last resort. Other methods are quicker, less costly, more private, and may have less lasting impact on the business.

Businesses can take a few relatively simple steps to protect themselves from disputes that end up in litigation:

• Make sure that all key agreements are in the form of business contracts.
• Draft the agreement(s) with legal professionals for enforceability by the courts.
• Include clauses for resolving disputes.
• Try to resolve disputes early through discussion, negotiation, or collaboration between lawyers, if necessary.
• Keep detailed records of interactions with clients, suppliers, employees, etc.
• Before signing contracts with new business parties, perform due diligence.

If you sense a business issue with a partner, supplier, vendor, contractor, or other entity that could escalate into a full-blown dispute, seek prompt legal advice to help prevent a costly legal battle in the courts.

For legal advice and assistance with a business dispute in the Biloxi area of Mississippi, contact a lawyer at Rushing & Guice, PLLC.