Business partners often disagree but that rarely leads to litigation. Most business owners resolve their disputes in some fashion prior to litigation. That’s why it is critically important that the governing documents of the corporation, whether it be a shareholder agreement or an operating agreement, provide for the resolution of disputes short of litigation. However, in the event that someone believes litigation is unavoidable or imminent, then the best thing for that person to do is to consult with their business litigation attorney in order to properly prepare themselves.

Well drafted contracts should have a dispute resolution mechanism built into them. Most often they require mediation before binding arbitration. Absent that, a contract dispute can be resolved in any way the parties agree. They can agree to private negotiations, mediated negotiations or some sort of binding resolution mechanism short of the court system. Unless otherwise agreed, the court system is always available.

One should document all of the relevant facts and keep copies of all of the relevant documents. Additionally, if you find yourself involved in a business dispute, you should consult a lawyer to determine what your rights and responsibilities are and what record preservation obligations you may have.

In New Jersey, trial by ambush is highly disfavored. The court rules are structured to allow each party to learn as much about the other party’s claim as possible prior to trial. This helps narrow the issues and encourages settlement. Discovery is the exchange of information under oath. Between parties, it generally takes three (3) forms, written questions (called interrogatories) which are answered in writing. Depositions are oral examinations under oath, as well as the production of documents accompanied by a certification genuineness and completeness of the production. Discovery, as to nonparties, generally takes the form of subpoenas.

Arbitration, which is generally binding, is a form of alternate dispute resolution which occurs outside of the court system of the state of New jersey. It is a proceeding typically held before either a single or three arbitrators who take testimony under oath and render a decision usually containing findings of fact and conclusions of law. The parties previous to arbitration will have agreed that the arbitrator’s decision is binding upon them and has the force and effect of a judgment of the Superior Court.