For most people in the corporate world, the terms business litigation and commercial litigation are interchangeable. However, while it’s true that both terms refer to legal action involving businesses, there are some very specific differences that set them apart. Whether you are pursuing a lawsuit or defending one, it is crucial that you understand these distinctions.
If you are facing business or commercial litigation, we highly recommend that you rely on your attorney for guidance. That said, the following is useful general information on how commercial and business litigation are different.
This type of lawsuit is based on the state and federal laws regarding how businesses are established and operated. Litigation arising under business law typically involves regulatory violations, which means the opposing party is often a state governmental body.
Business litigation may relate to:
- Workers Compensation
- Compliance with wage and overtime regulations
- Employment issues such as discrimination, harassment, and wrongful discharge
- Lawsuits arising under insurance policies
- Environmental requirements
- State and federal tax laws
- Whistleblower complaints
- Breach of fiduciary duty
- Workplace safety regulations
Business law also covers the actions of shareholders and directors in relation to the company’s Articles of Incorporation, stock distributions, and bylaws. As such, a business lawsuit could have the shareholders and the company as parties.
This type of lawsuit focuses on transactions and contracts. Derived from the term “commerce,” commercial litigation focuses on issues and disputes arising out of the buying and selling of products, provision of services, and other related transactions.
Unlike business litigation, commercial litigation is regulated by the Uniform Commercial Code (UCC). The UCC was created to address the differences in individual state laws that hindered interstate commerce, as well as to help businesses navigate their continually evolving legal requirements. Each state has adopted the UCC, however, states have modified the code to suit their markets and demographics.
In general, the Uniform Commercial Code (UCC) governs matters involving:
- Sale of goods
- Bank deposits and collections
- Negotiable instruments
- Letters of credit
- Investment securities
- Funds transfer
- Commercial paper
- Secured transactions
Commercial disputes typically arise between two businesses or between a business and an individual.
Although there are distinct differences between commercial and business litigation, both can significantly impact your company. As a business owner or leader, you need to have a firm grasp of business and commercial laws and their impact on your company. It is also essential to seek the services of knowledgeable and experienced legal counsel as soon as a lawsuit becomes a possibility. Your attorney is best equipped to understand your case, protect your business’s legal rights and financial interests, and ensure you are fully prepared for litigation.