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A Contractor’s Lack of Licensure Proves to Be a Big Problem in Its Breach of Contract Lawsuit

Poole Huffman, LLC

When you decide to pursue a breach of contract lawsuit, it is very important to make sure that all T’s are crossed and I’s dotted. Even seemingly small imperfections may do grave damage to your case. In one recent case, the lack of a contractor’s license proved to be a major problem for the plaintiff who sought damages for an alleged breach. Whether you are pursuing or defending a breach of contract action, you need to make sure you have an experienced Georgia commercial litigation attorney on your side.

The plaintiff in the lawsuit was a home building company that signed a contract for the construction of a residence in Cumming. After the builder had partially constructed the house, disputes arose between the owner and the builder. The owner terminated the contract before the job was completed. The sole owner of the building company, who had signed the contract on behalf of the building company, did not have a Georgia builder’s or contractor’s license when the builder did its work on the house.

After the owner terminated the agreement, the builder sued for breach of contract. The owner, in opposition, filed a motion with the court asking the judge to grant summary judgment, which would end the builder’s case before it even got to trial. The owner’s argument was that the owner of the building company was not properly licensed in Georgia, and Georgia law prohibits unlicensed contractors from enforcing a contract “or the performance of work for which a license is required.”

The trial judge agreed with the owner and the Court of Appeals determined that this was a correct interpretation of the law. Undisputedly, the builder did not have the proper licensure in Georgia when the work took place. Additionally, it was clear that the contract between the two sides identified the building company as the “contractor.” This meant that the law applied, and the builder was barred from obtaining judgment and compensation, unless an exception applied.

The court’s opinion declared that no exception applied to circumstances like this. Even though Georgia law does allow a homeowner to act as his own contractor and to employ unlicensed contractors, that was something controlled by a different statute. The statute regarding the enforcement of construction contracts was clear that it barred unlicensed contractors from enforcing construction contracts. Even though the two sides were allowed to work together, the builder, due to its lack of a license, had no recourse if the agreement went sour.

While this case involves a small, unlicensed contractor and an individual homeowner, it still represents some larger points that apply to commercial contracts generally. One of the key points is the importance of ensuring that all your business licenses and certificates are current in order to protect your rights, whether in breach of contract actions or elsewhere. The lack of a proper license, or a certificate of authority to do business, has the potential to greatly restrict your rights if you find yourself in litigation.

If you find yourself battling over a contract dispute, be sure you have the representation you need. Call upon the experienced Atlanta business attorneys at Poole Huffman, LLC. Our attorneys spent many years putting together clear and effective business litigation strategies to advance our clients’ interests. Contact our attorneys online or by calling 404-373-4008 to schedule your confidential consultation.

More blog posts:

Facing Jurisdictional Issues in a Breach of Contract Case in Georgia, Atlanta Business Litigation Attorneys Blog, July 16, 2018

How Procedural Errors Can Derail Your Judgment Collection Activity in Georgia, Atlanta Business Litigation Attorneys Blog, July 12, 2018

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