Basics of Business Law

Lawsuits are over the breach of a duty. The duty can arise under what's called the common law-- that is, the entire body of decisions handed down by courts. Or it can arise from a statute enacted by the legislature.

There are two kinds of duties. One is a duty arising from the breach of a contract, such as a contract of sale or an employment contract. Such suits are governed by the law of contracts.

The other kind of duty is a duty imposed by law, such as the duty of care imposed on every motorist. Such duties are governed by the law of torts; in the case of a commercial lawsuit, the torts are called business torts. Examples of torts are negligence, fraud and breach of fiduciary duty. These concepts are explained in more detail on other pages.

Basics of a Commercial Lawsuit

A commercial lawsuit has several stages. After the complaint is filed by the plaintiff, the defendant is permitted to make a motion to dismiss. These initial motions contend that, on its face, the complaint fails to state a claim that entitles the plaintiff to relief. For example, if the plaintiff alleges that the defendant defamed him by publishing a negative opinion, the action would be dismissed because the law doesn't protect people from the expression of opinions.

If the complaint survives the initial motion to dismiss, the parties engage in something called discovery. During discovery, each side asks for documents or information from the other side.

After discovery, each side is entitled to make a second motion, called a motion for summary judgment. This kind of motion contends that it is unnecessary to go to trial because there are no questions of fact that affect the outcome. For example, in a collection action to compel repayment of a loan, it's likely that the only question is whether the borrower repaid the loan. That can be shown from documents, making a trial unnecessary, and making it possible to resolve the lawsuit on a motion for summary judgment.

Assuming that the lawsuit can't be resolved on a motion for summary judgment, the parties proceed to trial. At the trial each side calls witnesses that provide direct testimony elicited by the lawyer that called them. Then the other lawyer cross-examines the witness in an attempt to undermine his testimony. Some trials are decided by a jury, while others are decided by the judge. Very few cases are tried to completion, and typically, if a case reaches trial, there is a good chance that it will settle.

The party that loses at trial may be able to take an appeal. The appeal may contend that the judge made errors in ruling on issues of law. Or it may contend that the trier of fact-- either the jury or the judge-- reached a conclusion that was not supported by the evidence. Statistically, very few appeals succeed; thus, the losing side must make a realistic assessment of whether the chances of success warrant the cost of an appeal.

Enforcing the Judgment

When the winning side is the plaintiff, he doesn't necessarily receive a check in the mail. He must find assets that can be sold to satisfy his judgment. This process, called enforcing the judgment, is covered in the discussion regarding collection actions.

In many instances, enforcing the judgment may be the main part of the lawsuit. For example, if a defendant knows he will lose, he may try to hide his assets rather than spend money contesting the question of liability. So a good lawyer has to know how to enforce a judgment.

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