Business Contract Lawyers for High-Stakes Commercial Disputes

While still in the early stages of development, courts are likely to analyze “autonomous agent” liability under traditional principles of agency law and negligence. If a company deploys AI to source or execute vendor agreements—and that system generates or “hallucinates” incorrect terms or enters into a contract without human oversight—the company may still be bound under legal theories, such as apparent authority.

The question may not be whether the AI made a mistake, but whether the company exercised reasonable care in how the system was designed, deployed, and supervised. That includes whether appropriate guardrails were in place, whether outputs were verified, and whether the level of autonomy matched the risk of the transaction.

As these tools become more integrated into business operations, proactive auditing of AI use and governance policies is quickly becoming a litigation-prevention issue, not just a compliance exercise.

The answer likely depends on the context. In M&A transactions, non-competes tied to the sale of a business are often enforceable against a seller. The greater risk exposure for businesses—and leverage for individuals—arises in the employment context.

From the employee’s perspective, if an employer attempts to enforce a non-compete against a “low-wage” employee in Virginia, the statute provides for potential civil penalties and fee-shifting. That can create meaningful financial exposure for the employer and significant leverage for the employee.

From the employer’s perspective, if an agreement violates Virginia law—particularly under Va. Code § 40.1-28.7:8—attempting to enforce it can carry real risk. Employers should evaluate whether employees fall within the statute’s definition of “low-wage” and take prompt steps to audit and revise restrictive covenant agreements where necessary.

Over the longer term, many businesses are shifting their strategy away from broad non-compete enforcement and toward trade secret protection. The Virginia Uniform Trade Secrets Act (VUTSA) and the federal Defend Trade Secrets Act (DTSA) remain powerful tools. If a departing employee or partner uses proprietary data, customer relationships, or internal processes to compete, those claims can provide stronger remedies—including injunctive relief, exemplary damages, and attorneys’ fees—than a traditional non-compete.

“Operational sandbagging”—where a buyer suppresses a business’s performance to avoid hitting earn-out targets—is a leading cause of post-closing litigation. While many agreements grant buyers “broad discretion,” courts in jurisdictions like Delaware and Virginia are increasingly applying the implied duty of good faith and fair dealing.

If a buyer defers high-margin revenue, accelerates expenses, or shifts resources to other business units to avoid an earn-out payment, the agreement may not have simply been “managed”—it may have been breached. Anyone suing for breach of contract needs to recognize that these disputes are highly fact-specific and often require expert analysis, including forensic accounting and business valuation.

In disputes involving buy-sell agreements or forced exits, valuation is no longer a static math exercise. If you are litigating a buyout provision, a simple historical EBITDA multiple is often outdated in today’s capital environment.

The applicable standard—fair market value, fair value, or a contract-defined metric—depends on the governing documents, ownership structure, and posture of the dispute. Valuation experts typically rely on income and market-based approaches, including discounted cash flow, capitalization of earnings, and seller’s discretionary earnings (SDE). The assumptions behind those models can materially affect the outcome.

In the current private credit environment, cost of capital and liquidity constraints have become central to valuation. Higher borrowing costs, tighter credit markets, and refinancing risk directly impact discount rates and forward-looking cash flow assumptions.

Small changes in these inputs can significantly shift value. Adjustments to projected cash flows, as well as discounts for lack of control or lack of marketability, often become key points of dispute.

The goal is not simply to reach a number, but to establish a defensible valuation grounded in the company’s actual economic performance and current market conditions. In both negotiated exits and contested buyouts, the outcome often turns on which valuation framework is accepted by the court.