Articles Posted in Contracts

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For many years, lawyers and other scholars of contract law have spoken of a “meeting of the minds.” This refers to a state, sometimes called mutual assent, where there is a common understanding of an agreement’s terms between all of the parties. When there appears to be a meeting of the minds, but subsequent disputes potentially reveal otherwise, then it may require litigation to reach a resolution. Wherever you are in the process, it helps to a knowledgeable Georgia commercial contracts attorney to provide advice and representation to meet your need.

A recent case involving a dispute between a cold storage facility and one of its clients was an example of this issue of assent. The dispute arose after the grass and sod company noticed that some of its stored seed had been damaged by water and rodents, and notified the storage provider of the problem. The grass company eventually sent the storage provider an invoice for $9,625.

A week later, the storage provider sent the grass company a check, but it wasn’t for $9,625. The $275 check represented 50 cents for each pound of damaged product. The storage provider arrived at the 50-cents-per-pound rate based on a set of “Contract Terms and Conditions” that were printed on the reverse side of its warehouse receipt.

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Commercial litigation can take on many twists and turns. A skilled Georgia commercial litigation attorney can help you handle your dispute, whatever events take place. For example, in one recent case, which involved a contract dispute between a gas station and its petroleum supplier, the situation became more complex when the gas station filed for bankruptcy and “rejected” the parties’ contract.

The underlying contract that spawned this litigation made a Duluth-based distributor/supplier of petroleum the exclusive provider to a gas station in Suwanee. The contract also required the gas station to buy at least 60,000 gallons of product every month. The agreement additionally called for the distributor to pay the gas station a 2-cents-per-gallon rebate on each gallon the gas station purchased from the distributor Moreover, the distributor processed credit card payments for the gas station.

At a later point, the gas station fell behind on the payments it owed to the distributor. The distributor decided to take action by withholding credit card payments owed to the gas station and netting them out against the sums that it believed the gas station owed it. Along the way, the gas station declared bankruptcy. As part of that action, the gas station “rejected” the supply contract.

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One reason it is so important to secure legal counsel when entering into a business deal is to make sure that the language of a Georgia contract is as clear and unambiguous as it can be. There are several steps a court will take when interpreting the language of a contract during litigation if the language is not unambiguous and clear. In a recent Georgia appellate decision, Fannie Mae appealed from a lower court’s granting of an LLC and individual’s cross-motion for summary judgment and denial of a motion for judgment regarding its lawsuit asking for a deficiency judgment after confirmation of a foreclosure sale.

The case arose when an LLC refinanced a loan with HSBC in the principal amount of $12,500,00 and also executed a note in the company’s favor. Additionally, a guaranty was executed indicating that the key principal would have personal liability. An apartment building secured the loan, and this was described in a deed. HSBC endorsed the noted and assigned it to Fannie Mae.

Later, multiple businesses recorded materialman’s liens against the building securing the loan. The LLC admitted during discovery that it hadn’t paid or remediated the liens of several construction businesses within 30 days. It also didn’t make payments as required under the note’s terms and Fannie Mae foreclosed on the property in 2010. The court confirmed the foreclosure sale. The apartment building sold to the highest bidder for $5 million, more than its fair market value.

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Your breach of contract case may start out looking seemingly straightforward to you, but it may still eventually come to have many unexpected twists. These may involve the facts of your case, the law, the rules of procedure, or all of the above, which is one reason among many why an experienced Georgia business litigation attorney can benefit the pursuit of your case. For example, one north Georgia business lost its bid to litigate a contract breach dispute in this state when the Georgia courts concluded that the more appropriate forum for the case was California.

The case began when a north Georgia business that produced training events for other businesses fell into a dispute with the California business it had hired to perform projects for it. Eventually, the California company decided to file a lawsuit in that state. The Georgia business sued here, alleging breach of contract and fraud.

The California company asked the Georgia court to throw out the case here on the basis of something called forum non conveniens. Forum non conveniens is a Latin phrase that translates to “forum not agreeing” and essentially means that a case should not be heard in a particular forum (location) because there is a forum elsewhere better positioned to handle the case.

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In a commercial litigation situation, there may be multiple different ways to achieve success. There can also be a variety of ways to damage or destroy your case. One of these is failing to complete various procedural necessities, or failing to do them on time. Procedural compliance, even though it is often completely independent of the facts of your case, can still make all of the difference between a favorable and an unfavorable outcome. To be sure your case doesn’t get tripped up by these types of problems, make sure that you retain skilled Georgia business litigation counsel.

A recent lawsuit between a contractor and a financier of commercial equipment was an example of this risk. The finance company asked for, and received, a summary judgment in its favor. The trial court’s summary judgment order effectively ended the case.

Not satisfied, the contractor sought to appeal the summary judgment in favor of the finance company. The contractor filed its notice of appeal in a timely manner. Unfortunately for it, it fell short with regard to several other procedural requirements. When you are seeking to appeal a court order that went in favor of your opponent, several things need to be done. A notice of appeal must be filed within the time period allotted by the law. Additionally, you must also make a timely request to the trial court to have a transcript created of the hearing that produced the order you are appealing. Furthermore, there may be certain court costs that you must pay and pay within a specific deadline.

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Whenever any business person or entity decides to create a new joint venture, the people behind that venture likely hope for great success. Sometimes these joint ventures do go on to yield positive results. Other times, however, the venture doesn’t work out. When joint ventures fail and break up, that can sometimes lead to litigation. When they do, the exact language that was contained in your operating agreement may prove to be the key to resolving the case. Whether your joint venture has failed and entered into the court system, or you are at the beginning phase and are fleshing out the terms of an operating agreement, it is important to make sure you have experienced Georgia business attorneys handling your case.

An example of a joint venture that didn’t meet with success and did trigger litigation was an Athens-based LLC formed to develop medical technology. Ownership of the joint venture was split equally between a holding company and another LLC, Healthy-IT, that was formed expressly for the purpose of entering into the joint venture. Specifically, the venture’s goal was to develop electronic medical record software.

Eventually, the venture devolved into a dispute, and the joint venture LLC, along with the holding company and others, sued Healthy and related entities for, among other things, breach of contract, breach of fiduciary duty, and misappropriation of trade secrets. The defendants filed a counterclaim that accused the plaintiff of breach of contract, among other things.

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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.”

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In any commercial contract, there are likely several things you desire to get from the arrangement, which is why the agreement you sign hopefully has been carefully negotiated prior to execution. To make sure that you get the benefit for which you negotiated, it is important to understand what types of clauses are, and which are not, enforceable under Georgia law. To be sure your contract or any of its clauses won’t be thrown out as unenforceable, ensure you’re relying on representation from a knowledgeable Georgia commercial contracts attorney.

A recent case decided by the federal 11th Circuit Court of Appeals was one that looked at what type of fee provisions could, or could not, be enforced under Georgia law. The underlying deal was one between a chain of “quick service” Mexican restaurants and a supplier of tortillas. The deal called for the tortilla company to supply the restaurant’s tortilla needs. The deal had a provision in it for the imposition of something called a “resolution fee.” In this agreement, the obligation to pay a resolution fee was triggered only if the restaurant didn’t order at least $2.5 million worth of products from the supplier over the span of contract term.

So, if the restaurant cleared $2.5 million, the resolution fee was $0. If it fell short of $2.5 million, the resolution was equal to 5% of the difference between $2.5 million and the value of the products that the restaurant actually ordered and accepted. The deal called for the restaurant to pay the fee within 30 days, if one was owed.

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Winning your commercial litigation matter is about more than just making sure that you have the facts on your side. It is about having the law on your side and also making sure that you have cleared all of the necessary procedural hurdles, like pursuing your case in the correct venue. These are all areas in which knowledgeable Georgia business litigation counsel can help you ensure that you are equipped to succeed.

One recent case in which venue was an issue was an action pitting against each other two former business partners whose relationship had definitely deteriorated. The defendant was a Norcross-based real estate developer. The plaintiff was an Israeli company that raises capital for real estate investments. In 2008, the two businesses consummated a Solicitation Agreement. The agreement came with an arbitration clause. That provision said that the parties agreed to arbitrate their disputes. If the capital company brought the case, the arbitration would proceed in Atlanta. If the developer brought the case, it would be arbitrated in Tel Aviv.

Some time later, once the relationship had soured, the capital company brought a breach of contract claim. In that same action, which was handled in Atlanta, the developer brought a counterclaim that accused the capital company of defaming the developer in statements made to other Israeli investors.

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One of the types of provisions that you might negotiate to include in your commercial lease is an exclusivity term. Many commercial leases contain exclusive use clauses, particularly in situations in which the space is located in a larger shopping center that contains numerous tenants. What an exclusive use provision does for you, as a tenant, is allow you to use your leased space to operate your specific type of business (such as a clothing store, grocery store, electronics store, or restaurant) and to restrict or bar other tenants from operating a similar or identical type of business in that same shopping center.

Obtaining these provisions, and then making sure that they are enforced, can be vital for your business. The chances are that the calculations you made regarding whether or not a particular space’s lease terms made business sense for you included assumptions that you would have a certain zone where you were free from direct competition. If you end up facing competition within that zone, you aren’t getting the benefit of the bargain for which you negotiated. Effectively negotiating lease terms, and then aggressively working to enforce those terms, are areas where it pays to have experienced Georgia business counsel.

As an example, consider the federal litigation undertaken recently by a Florida-based supermarket that has several locations here in Georgia. The supermarket had negotiated and signed certain leases in Florida that included exclusivity provisions regarding groceries and pharmacies. The problem came after certain other stores, including a “closeout” retailer and a dollar store, opened locations in the same shopping centers and began selling food. This, according to the supermarket, was a violation of the exclusivity clause.

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