Utah Business Litigation: Key Contract Issues and How to Avoid Lawsuits
A contract is only as strong as the exchange it documents. Utah courts routinely set aside non-compete covenants, indemnity clauses, or purchase options that lack fresh consideration—particularly where the only “benefit” is continued at-will employment. That gap becomes critical when business owners try to roll out template agreements pulled from the internet, this is where business litigation becomes prominent.
Do you have questions about business contracts or face a potential dispute? Don’t wait for problems to escalate. Reach out to Weber Law Group for a consultation. Our dedicated corporate attorneys in Utah can help you understand your rights and obligations, and work to protect your business interests.
Statute-of-Frauds Violations in Business Litigation
Utah’s Statute of Frauds demands a signed writing for contracts that cannot be performed within one year, surety agreements, and any transfer of real-property interests. A handshake lease for two years or an email confirming a personal guarantee is unenforceable, leaving only an expensive unjust-enrichment claim.
Legislators tightened the rule in 2024 to include most credit agreements and long-term service contracts, a change that blindsided several national vendors last year. The fix is straightforward: craft one integrated document, attach every referenced exhibit, and collect electronic signatures with platform time-stamps that prove authenticity.
For deals involving multiple companies, ensure each entity signs in its correct capacity; Utah courts refuse to apply corporate-veil theories to cure signature gaps. Embedding a clause that bars oral modifications forces future amendments into writing as well, saving thousands in discovery costs. A seasoned business lawyer in Utah will also add a merger clause, shutting off arguments about side promises.
Choice-of-Law and Venue Mismatches
Utah generally respects parties’ freedom to adopt another jurisdiction’s substantive law, but procedural rules—from service of process to post-judgment collection—remain local. A poorly drafted clause can send a dispute to California courts while leaving enforcement in Utah, multiplying legal fees. Utah Code § 78B-4-705 confirms that any agreement naming Utah law must apply Utah public-policy protections, including consumer safeguards.
Conversely, a clause picking Delaware law cannot waive those statutes for a Utah consumer. The safest path is to pair governing law with an exclusive-venue provision selecting a single county district court or arbitration forum. Businesses that sell nationwide should add a carve-out for small-claims matters to avoid unconscionability arguments.
Working with the top business law group that litigates these challenges daily lets companies sequence venue, forum, and arbitration language so they complement rather than contradict each other, reducing the risk of a forum fight that derails settlement talks.
Inflated Liquidated-Damages and Interest Terms
Damages clauses aim to set a predictable price tag on future breach, but Utah judges strike numbers that look punitive rather than compensatory. In Sunstone Realty Partners X LLC v. Bodell Construction Co. (2024 UT 9), the Utah Supreme Court also applied the default 2.29 percent post-judgment rate after the contract failed to specify one—costing the winning party nearly $750,000 in lost interest.
The lesson is two-fold: first, set liquidated figures that approximate probable losses at the time of contracting, backing them with industry data or historical margins; second, include a clear contractual rate for both pre- and post-judgment interest that complies with Utah’s usury caps. Periodically review these numbers as markets change, and tie any adjustment formula to a public benchmark such as the prime rate. These steps protect cash flow and remove the incentive for a breaching party to challenge the clause.
Attorney-Fee and Indemnity Pitfalls
Utah follows the American Rule—each side bears its own legal fees—unless a statute or contract shifts that burden. Fee provisions drafted in haste often omit appeals, arbitration, or collection costs, leaving the “winning” party to absorb tens of thousands of dollars.
The Utah Supreme Court underscored the danger in New Star General Contractors, Inc. v. Dumar (2025), vacating a fee award because the lien amount was miscalculated and the clause lacked precise language. Businesses can avoid a similar fate by (1) defining “prevailing party,” (2) covering negotiation, mediation, trial, and appeal, and (3) expressly including costs of enforcing any judgment.
Mirror these terms in indemnity clauses to close the loop on third-party claims. Annual contract-template audits with a skilled business lawyer in Utah ensures new statutes, such as recent lien-notice amendments, do not nullify well-intentioned fee language. Robust cost-shifting provisions discourage frivolous suits and strengthen settlement leverage.
Business Litigation from a Utah Corporate Lawyer Can Fortify Your Employee Agreements Today
Weber Law Group combines trial-tested strategies with meticulous drafting to keep disputes out of court. From employment law for startups to high-value corporate acquisitions, our attorneys guide clients through Utah’s evolving statutes while drafting contracts that stand up in any forum.
Ready to strengthen your agreements before the next deal closes? Request a contract review today and put Weber Law Group’s business litigation insight on your side.