In any sort of business or commercial dispute, there is a high probability that certain written documents will play an important role. Sometimes, though, it’s what isn’t written down that may hold the key to a successful case. In some situation, oral contracts may be valid and binding. In order for that to happen, though, there must be proof that a consummated agreement (in other words, a “meeting of the minds”) took place. Whether you are seeking to enforce or to oppose the enforcement of an oral contract in your business litigation, it helps to have the resources of skilled Georgia commercial debt collection counsel on your case.
One recent case in which the enforceability of an oral contract was at issue involved a farm and its agricultural products supplier. The farming business was owned by a husband and wife, and the wife’s father, T.E., signed a personal guaranty with the supply company guaranteeing payment of all of the farming company’s debts with the supply company. The wife’s father eventually decided he wanted to get out of farming and did not intend to continue guaranteeing the farm’s debts. He allegedly told the supply company’s branch manager about this decision, and the manager allegedly was “in total agreement” about the decision. No written document to this effect was ever produced at trial, however.
The farm racked up debts in excess of $200,000. The farm eventually missed payments, and the supply company asked T.E. to pay, based upon his guarantees. The man refused, and the supply company sued. The trial court eventually granted a summary judgment for the guarantor, which meant that the supply company lost its case before it even made it to trial. The judge concluded that T.E. had sufficiently established that he had rescinded his personal guaranty.
The supply company appealed and won a renewed opportunity to pursue its case. The appeals court made a couple of key decisions on the way to reviving the creditor’s case. It first concluded that an agreement to rescind a personal guaranty did not have to be in writing in order to be valid. A law called the “Statute of Frauds” covers which agreements must be written down and which ones may be consummated through an oral contract, and, according to the court, that statute did not mandate a written document for this type of agreement.
Any agreement, though, whether oral or written, must have several key pieces. Two of these are offer and acceptance. There has to be a “meeting of the minds” between the two sides. In this case, that key element of a “meeting of the minds” was still in dispute, which meant that the guarantor was not entitled to summary judgment, and the creditor could proceed. The guarantor asserted that he notified the creditor of his rescission of the guaranty and that the supply company’s manager said he was “in total agreement.” The manager stated that he acknowledged understanding the guarantor’s desires, but he never stated that he was releasing the guarantor from the guaranty. If the supply company was able to prove its version of the facts, it would have a viable case and a potentially winning case for payment.
As a creditor, you may find it necessary to take various options to collect the money owed to you. For all of your legal representation needs, talk to the experienced Atlanta commercial debt collection attorneys at Poole Huffman, LLC. Our attorneys have been working for many years to help their clients protect their business interests. Contact our attorneys online or by calling (404) 373-4008 to schedule your confidential consultation.
More blog posts:
Securing Your Credit Union Pt. II: Keeping Internal Fraud Out, Atlanta Business Litigation Attorneys Blog, Nov. 16, 2015
Securing Your Credit Union Pt. I: Making Cybersecurity A Top Priority, Atlanta Business Litigation Attorneys Blog, Nov. 11, 2015