Business agents are employees, independent contractors, or others who have the authority to bind a business into contractual relationships with third parties. Their distinction confers on them some prestige –– but it also means that business agents may sometimes find themselves involved in company lawsuits, including in the ten ways described below. If you would like information about how to protect yourself from unnecessary legal risk while operating as a business agent, consider contacting an experienced Arizona business lawyer with Harrison Law, PLLC to discuss your legal options. Reach the firm by calling (480) 320-2310 today.
Breach of Contract
Breach of contract cases are fairly common, as either party may be able to sue if they believe the other side of the deal did not do something they agreed to do. If an agent has conducted business on behalf of a client who is accused of breaching a contract, the business agent may be called upon to provide evidence or responses to discovery requests, such as:
- Emails, call records, letters, memos, or other communications regarding the matter
- Written contracts and addendums
- Lists of related financial transactions
- Other evidence of transactions or issues that arose during the agreement
While responses during the pre-trial discovery process are very common, business agents could also be called to testify on the witness stand in a courtroom trial regarding their interactions with both parties and what they personally knew about the matter at stake in the lawsuit.
Employment Disputes
Businesses must follow various Arizona labor laws, as described by the Arizona State Senate Research Staff. If a company violates these laws, its employees may file legal claims with the Equal Employment Opportunity Commission or the Arizona Attorney General. In addition to an employee suing for breaching a written employment agreement, some of the most common employment disputes involve:
- Discrimination in the workplace
- Wage violations
- Family Medical Leave Act violations
- Sexual harassment
Fraud
Fraud typically involves the intent to deceive another party for financial gain. This can take many different forms, such as:
- Withholding material information
- Lying about or misrepresenting material information
- Providing bad advice for financial gain
- Intentionally misleading a customer or client
- Participating in scams
A finding of fraud may result in a court order to pay the scam’s victim substantial damages. Because business liability insurance policies may contain exclusion clauses for covering costs related to illegal activities on the part of the policyholder, business agents may wish to consider working with an experienced lawyer if they are facing fraud allegations. Harrison Law, PLLC may be able to help.
Negligence
“Fraud” typically refers to a form of deliberate misconduct, and under certain circumstances fraud cases may even be tried in criminal courts. Civil allegations of fraud, however, may also be based on the plaintiff’s contention that the defendant acted negligently.
Negligence is itself a common ground for company lawsuits, as it only requires the plaintiff to show carelessness, rather than proving the other party engaged in deliberate malfeasance. In fact, negligence forms the basis for a wide variety of lawsuits. Companies are frequently held responsible for the negligent actions of their employees, due to principles of vicarious liability, and business agents may sometimes become party to company lawsuits under the same rubric. Examples of circumstances under which businesses may be sued for negligence include:
- Failing to take a particular action, such as filing a form
- Making an error in judgment regarding an investment
- Failing to conduct due diligence
- Not performing under the contract terms
- Failing to disclose pertinent information
- Causing an automobile accident while working (due to failure to exercise duty of care)
- Failing to communicate with a client in a timely manner regarding information the client had a right to know
- Allowing for customer data to be hacked or misused
Failing To Disclose Information
A business agent might become involved in a company lawsuit if they failed to disclose crucial information to either their client or other involved parties. If a business agent intentionally withheld pertinent information that they knew would have influenced a business deal or investment decision, this omission might result in legal action against the agent, who could be accused of misrepresentation, or of a failure to disclose material information, according to New York University School of Law. This could also lead to allegations of negligence or breach of fiduciary duty, prompting legal involvement due to their failure to provide accurate and essential information.
Non-Compete Agreements
A non-compete agreement is a form of agreement commonly signed by business partners, independent contractors, or employees, stating that if the signatory stops working for the company, they will not work for a competitor or open a business competing against the other party to the contract for a certain amount of time (specified in the agreement). An employee who is terminated from a job may try to contest this type of agreement after the fact, or the employer may try to enforce the agreement after finding the former employee is working for a competitor. Business agents in various fields may be called in to explain their knowledge of a particular situation.
Breach of Fiduciary Duty
In most businesses, business agents and other professionals have a fiduciary duty to put a customer’s interests ahead of their own. If they violate this duty, they may be subject to legal action. Some types of breaches of fiduciary duties will be based on the particular relationship between the agent and client. Some examples of breaches of fiduciary duty include:
- Stealing money or property from the client
- Giving financial advice that is in the business agent’s best interests and not the client’s
- Failing to disclose pertinent facts
- Making unauthorized transactions
- Failing to communicate with or respond to the client
- Not providing accountings or other required documentation to the client
Apparent Authority
Business agents may bind the company to a contract with a third party. In some cases when they do not have this legal authority, their actions may make it seem that they do. Under this apparent authority, the business may be responsible for the promises the agent made on the business’ behalf.
Witnessing Interactions
Even if the business agent did not do anything to result in a lawsuit and may not have been involved in the activities with which the lawsuit is concerned, they may have witnessed interactions that become relevant to legal proceedings. This could result in them being called to testify in court or in pre-trial discovery about what they observed.
Claim Evaluation
Once a potential lawsuit is identified, a business may take steps to hire a lawyer to determine the best method to protect its interests. Whether the lawsuit is filed by an employee, customer, vendor, or other party, the stakeholders in the company will want to know its legal options. Depending on the circumstances, these options may include correcting an issue before it becomes a bigger problem, reporting the matter to insurance to cover, negotiating a settlement, or taking the case to court. As part of a claim evaluation, lawyers may talk to business agents and anyone with information about the dispute to properly evaluate the claim.
Contact a Business Lawyer for Help With Your Case
These are just a few ways that business agents could find themselves in company lawsuits. There are many other potential avenues by which a business agent might become involved in a company’s legal matters. If you would like to learn more about how to protect yourself, as a business agent, from company lawsuits, consider contacting an experienced Arizona business lawyer with Harrison Law, PLLC. An experienced attorney may be able to evaluate your situation and explain your legal options based on the details of your particular case. You can schedule a confidential consultation by calling (480) 320-2310 today.
© 2024 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved
This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.
