Articles Posted in Contracts

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Having to pursue commercial litigation can be a complicated matter. It may be profoundly more so when the business partner whom you’re suing is a foreign government. The law provides wide latitude for foreign governments to avoid facing suit in the United States. This protection is called sovereign immunity. There are certain exceptions that remove that immunity and make the foreign government subject to a legal action in the U.S. Whether you are suing a sole proprietorship located five miles from your business or a foreign government, make sure that you protect your business interests by selecting skilled Georgia business counsel.

One recent case that has potential resonance here in Georgia and that involved sovereign immunity was an action that involved an alleged agreement between a Floridian and the government of Venezuela. Ricardo was the great-great-grandson of Joaquin de Mier, whose main significance within history (and this case) was his friendship with South American leader Simon Bolivar. Bolivar spent his final days at de Mier’s home and left his friend with a “treasure trove” of possessions. That trove eventually passed through inheritance to Ricardo.

The Venezuelan government allegedly stated an interest in purchasing the Bolivar collection that Ricardo held. The two sides entered into negotiations. That year, the Venezuelan government flew Ricardo and the collection from the United States to Venezuela. Ricardo believed the two sides had an agreement:  the Venezuelan government would inspect the collection and either would buy it or would, if declining to purchase, return the collection to Ricardo’s possession. Five years later, Ricardo had neither his collection back nor any payment from Venezuela.

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In any commercial agreement, there are many terms that can be of great importance. Some may be obvious, while other essential provisions may go “under the radar.” Even something as minute as deciding which state’s laws will be used to resolve any disputes can make all of the difference should you find yourself in litigation. In one recent case, a contract’s clause regarding the controlling law allowed a plaintiff to revive its case because the chosen state had a broader basis for allowing plaintiffs to obtain recovery. Cases like these highlight the importance of making sure you have skilled Georgia business counsel representing you, whether you are negotiating or litigating your contract.

In that recent case, decided by the 11th Circuit Court of Appeals, whose decisions affect federal actions in Georgia, Florida, and Alabama, a group of business entities reached an agreement with a hedge fund for a line of credit. The borrowers eventually became displeased with the lender’s dispersal of funds and asked the lender to allow them to obtain additional financing from another lender. The hedge fund said no. This set of problems allegedly cost the borrowers the chance to complete an acquisition deal.

The two sides continued to encounter problems. The borrower allegedly continued not to receive funds as it should have. According to the lender, the borrower was the party who defaulted. Eventually, the borrowers sued, alleging a multitude of claims. The borrower had a substantial problem with its case, though:  the release provision contained in the agreement documents it signed. Almost all of the claims that the borrowers asserted in their lawsuit were causes of action that they were expressly prohibited from asserting in a lawsuit, based upon the terms of the release.

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Many times, commercial contracts are very intricate and may span across dozens or hundreds of written pages. Sometimes, though, they span zero written pages, because they’re oral contracts. Oral contracts may be somewhat more challenging to enforce as opposed to written agreements, but they are generally enforceable in Georgia in most situations. Whether yours is an oral contract or a written contract, make sure you have the right Atlanta contract attorney by your side when it comes time to go to court to seek enforcement of that agreement.

Sometimes, oral contract disputes and enforcement actions can involve substantial damages in the millions of dollars. That was the case recently for music and TV star Kelly Clarkson. According to a September Deadline article, Clarkson and her management company reached an oral agreement in 2007, in which the agency would help Clarkson find professional opportunities and Clarkson would pay the agency commissions. More than a decade into the deal, a dispute arose regarding commissions Clarkson owed the management firm. Deadline reported that the firm, in its lawsuit, asserted that Clarkson owed it more than $1.4 million and would eventually owe an additional $4 million in estimated commissions.

The agency is litigating the Clarkson case in Los Angeles County, but this case may reasonably lead you to ask… what about my business relationships in Georgia and what happens if someone asserts the existence of an oral contract?

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There are many “battles” that must be won in order to achieve a successful result in your commercial litigation action. Sometimes they may involve getting a desired piece of your evidence on the record or stopping an unqualified expert witness from testifying for your opponent. Sometimes, the battle may be something as basic as contesting your case in the court venue and jurisdiction you prefer. As you pursue a beneficial outcome, it helps to have Georgia commercial litigation counsel on your side who are experienced in fighting all of these types of battles.

One example of this was a plaintiff who had to fight to keep its lawsuit in Georgia state court. The plaintiff that filed the lawsuit in this case was a developer of apartment complexes. The developer financed its projects through loans from the U.S. Department of Housing and Urban Development. To aid it in the acquisition of this funding, the developer contracted with a mortgage services company, which the developer retained to assist with the HUD loan process. In exchange for its services, the mortgage company received a loan origination fee.

Eventually, the relationship deteriorated, and the developer brought its claims against the mortgage company and others. It accused the mortgage company of breaching the parties’ contract, committing fraud, and violating Georgia’s Racketeer Influenced and Corrupt Organizations (RICO) law.

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Many people, when negotiating a commercial contract, may tend to focus on the larger items within the agreement. In any commercial agreement, though, it is important to make sure that both the large and the small provisions have received careful scrutiny. An experienced Georgia business attorney can help you ensure that any contract you sign has all of the clauses you require and none of the provisions that would harm your position. Even the most seemingly rote of clauses can be profoundly important, as seen in one federal case from this year in which the outcome turned upon the parties’ inclusion of a “choice of law” provision that required relying upon Kansas law to resolve disputes.

The parties to the agreement that eventually fueled the litigation were a Connecticut LLC and a Kansas-based airplane manufacturer. The parties’ contract called for the manufacturer to sell an aircraft to the Connecticut LLC. Among the contract’s terms was a provision that a wholly owned subsidiary of the manufacturer would manage the jet for the buyer for a period of five years. Another of the terms stated that all contract disputes should be resolved by using the laws of the state of Kansas. When the parties negotiated the deal, the seller indicated that, at the end of the five years, the plane would still be worth 90% of the buyer’s purchase price.

Eventually, the manufacturer decided to sell off the aircraft management business to an outside entity. This took place three years into the five-year term spelled out in the buyer’s contract. The buyer sold the plane, recouping less than 75% of the purchase price. The buyer, displeased with the outcome, sued in federal court in Florida. The buyer contended that the seller had used fraud to induce it to make the jet purchase and had breached the agreement.

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Before the trial on your breach of contract claim starts, there is much work that must be done beforehand to make sure your side has all the information, no matter how great or small, that’s needed for success. When it comes time to do that pre-trial work, make sure you have retained the services of an experienced Atlanta commercial litigation attorney. Your knowledgeable legal team will understand that, sometimes, details that may seem insignificant are actually extremely important.

As an example, we can look at this recent case involving a contract dispute between a Forsyth County apartment complex owner and the Gwinnett County contracting firm it hired to do renovation work on its complex in southwest Atlanta.

A lot of contract dispute cases may be decided on resolution of factual matters (“Did the service provider receive payment or not?”) or else resolution of legal questions (“Did the service provider’s misconduct meet all the elements of a breach under Georgia law?”), but some cases — like this one — can be profoundly influenced by details that, to the untrained eye, might seem trivial.

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Whenever a party to a contract believes that the other side has failed to perform in accordance with the agreement, the results can be complicated. This is especially true if the law gives one party to the contract immunity from suit in certain situations. This is just one of many potential unique challenges that might emerge in a breach of contract situation. An experienced Georgia contract litigation attorney can help you be prepared for whichever unique challenges occur in your case.

One example of a case involving immunity was an Atlanta contractor’s breach of contract lawsuit related to its construction of a cultural center in the Atlanta area. The contractor signed a contract with Fulton County for the construction of a new “Aviation Community Cultural Center” near the Fulton County Airport. The contract included a time term, dictating that the contractor was required to complete its work within 287 days of the date that the county gave it the green light to start work, or the date work actually began, whichever was first.

The contract did contemplate that the work could take longer. The agreement allowed for what’s called a “change order,” which in this case must be a written document signed by both parties, extending the time for completing the work due to changes in project scope, or the emergence of other delay-inducing issues outside the control of the contractor.

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You’ve worked to consummate a commercial agreement. Both sides have signed, and you’ve done the work. Now the other side won’t pay and says that the person who signed wasn’t authorized and that there is no binding obligation to tender payment to you. When faced with this situation, you may find yourself needing to litigate to obtain the payment owed to you. When you encounter these and other conflicts, you need experienced Georgia business litigation counsel to handle your case.

A case in which the hypothetical described above happened in real life was when the owner of a north Georgia-based truck parts company requested a proposal from a demolition contractor regarding some work needed on the parts company’s property. Eventually, the contractor made the proposal to the parts company’s owner, Patricia, and one of her employees, Edwin. Edwin signed the proposal in Patricia’s presence while Patricia was on the phone. Having seen Edwin sign proposals for the parts company before, the contractor did not demand that Patricia sign. Instead, the contractor simply got started and completed all of the work outlined in the proposal.

After the work was done, the contractor delivered an invoice to the parts company, but the contractor did not receive payment, so it sued. At trial (and on appeal), the parts company argued that it never had any obligation to pay the contractor because Edwin had no actual or apparent authority to enter into contracts on behalf of his employer. Actual authority refers to situations in which an entity either expressly or impliedly gives specific powers to someone, who takes on the role of an agent of the entity. Apparent authority occurs in situations in which a third party would reasonably believe that the would-be agent had authority to act on behalf of the entity.

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When you are seeking relief because your contract partner has breached your agreement, there are several ways to achieve success. Some cases require a full trial, with many days of arguments, witness examination and cross-examination, experts and presentation of other evidence, followed by a judgment by the jury (or the judge if it’s a bench trial.) In other cases, you may be able to achieve success by filing a motion for summary judgment and winning that motion, which sidesteps the need for a trial on the issue of liability. Whatever route your case requires, be sure you have legal representation from a skilled Atlanta commercial litigation attorney to guide throughout the process.

To win a motion for summary judgment in a breach of contract case under Georgia law, you need several things. You need proof of the existence of a legally valid contract, evidence that the other side breached the agreement and proof that that breach harmed your business. A failure on any one of these three areas can be fatal to your case.

A recent federal case, however, demonstrates what can happen when you do have all of these required things. The case pitted a prison management firm against its former food distributor. The two sides inked a supply agreement in 2007 and amended it in 2008. Ten years after signing the amended agreement, the distributor sent an email announcing an immediate termination of the contract, declaring that the arrangement was no longer profitable for its business.

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Whether you are litigating in federal court or Georgia state court, it is very important to ensure that your side is in total compliance with all statutory demands and procedural requirements. Failing to meet the obligations of these rules can have disastrous consequences for your case. In some situations, even slight missteps could cost you thousands of dollars (or more). Make sure that your interests are completely protected by retaining a skilled Georgia business attorney to handle your case for you.

One recent federal case from the 11th Circuit Court of Appeals demonstrates how damaging a lack of complete procedural compliance can be. The case began when a motel group filed a lawsuit against an insurance company, alleging that the insurance company was liable for breach of contract. The lawsuit started out in Florida state court in 2013, but, as is the case with many commercial litigation actions, the case qualified for removal to federal court, which the insurance company sought in this situation.

Ten days after the removal to federal court, the insurance company submitted to the motel group a settlement proposal that complied with the Florida statutes and the Federal Rules of Civil Procedure. Florida Statutes Section 768.79 gives the recipient 30 days to respond. The motel group did not respond in that time-frame.

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