Articles Posted in Contracts

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When you are locked in a dispute that leads to commercial litigation, there are several things that go into a successful outcome. Some of those are related to the facts of the dispute, but others are wholly unrelated to the factual matters. Instead, they turn solely on issues of the law and the rules of court procedure. Success, then, relies on not simply having a strong command of the facts of your case but also issues of law and procedure and how to use those to protect your business. This is one of the many reasons why it pays to rely on an experienced Atlanta commercial litigation attorney to handle your case.

If you have brought your lawsuit in state court, you have obviously done so because you and your legal team have concluded that the state court is the best place to litigate and to obtain a fair outcome that will fully compensate you for the harm you suffered. Given that, what you may have to overcome is an effort by the other side to move the case to federal court.

Fortunately, though, there are several potential ways to attack an effort by the other side to relocate your case from state court to federal court. As a recent breach of contract case illustrates, one of those relates to something called “diversity jurisdiction.”

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Whenever you’re preparing to enter into a commercial contract, there are several things that must be done right. Two of these are (1) proper negotiating to get a satisfactory deal and (2) making certain that the written agreement reflects the deal that you negotiated. Each of these steps (and more) is a place where an effective Atlanta commercial contracts attorney can help you advance your business interests. Retaining the right attorney and getting the right contract are vital because once you sign, the courts are probably going to enforce whatever the terms are in the written agreement.

For an example, consider this federal court case between a Florida-based CBD oil distributor and a Central American hemp-based biotechnology supplier. The supplier and the distributor inked a deal in 2014 making the Florida company the exclusive distributor of the supplier’s products.

The relationship went south quickly. Four months after signing, the distributor canceled the contract, accusing the supplier of shipping impure CBD oil in contravention of the agreement’s requirements. The supplier fought back by demanding arbitration of its claims of breach of contract, conversion and tortuous interference. The dispute went to arbitration, where the supplier scored a resounding victory.

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Business and commercial venture breakups are a bit like marital breakups… you hope that everything will proceed smoothly and amicably, but it often doesn’t. When you’re a member of an LLC who has decided to leave the company, you may often simply want to go your own way. Sometimes, though, the LLC won’t let that happen. When that happens to you, make sure you have the legal protection you need from a vigilant and experienced Atlanta commercial litigation attorney.

J.O. was one of those kinds of LLC members. Back in 2014, he was one of the members who formed a Conyers-based multi-level marketing LLC. In 2017, after experiencing concerns about his compensation as well as the company’s leadership, J.O. decided to leave the company. Around the same time, J.O. signed up as a customer of another multi-level marketing entity.

After J.O. left the company, the LLC sued him on the basis that he had breached the LLC’s operating agreement. According to the LLC’s complaint, J.O., who had been a vice president of sales, had breached his contractual obligations by working for a competing company.

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In any commercial contract dispute, details matter. The difference between defeat and success can be just one word that was excluded or included in your agreement, or it could be a statutory obligation your case triggered that you didn’t know existed. That’s why you need more than just mere legal representation; you need a knowledgeable Atlanta commercial litigation attorney who is fully versed on all the ins, outs and nuances your case can implicate.

A breach of contract case from here in North Georgia is a good example. The underlying contract involved a Marietta-based property owner that leased its property to various businesses, including a gas station in Norcross. The contract between the two sides stated that the lessor and the lessee would share the earnings that the machines generated on a 50-50 basis.

In a lot of circumstances, any dispute that arose between the two LLCs would have been resolved through ordinary civil litigation. This was not one of those circumstances. The machines whose earnings generated this dispute were “coin-operated amusement machines,” which are regulated by the Georgia Lottery Commission (GLC).

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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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