An old adage says “caveat emptor” or “let the buyer beware.” Similarly, the law requires parties to a contract to understand what they’re signing before they sign. That obligation is especially high when the contract parties are both equally strong and sophisticated commercial entities. If you are a corporation, trust, LLC, or any other sophisticated business entity, you need to be especially sure that the contract you sign is the agreement you negotiated and wanted. To facilitate that goal, make sure that you have skillful Georgia contract attorneys handling your representation.
An example of this played out in the federal courts earlier this year. The origins of what would become the case began with a contract between a Swiss trust and a U.S. bank headquartered in Ohio. The agreement called for the bank to take possession of bonds worth $428 million (U.S.), hold the bonds for safekeeping, and provide the trust with some additional services. In exchange, the trust agreed to pay the bank $90,000.
A problem arose, and the bank sent the bonds back to the original issuer. The bank notified the trust, but the trust initially took no action. Two years and two months after that took place, the trust sued the bank for breach of contract in federal court in Florida. The bank was in breach because it didn’t maintain possession as promised, and it didn’t safeguard the bonds as promised.
The bank asked the judge to throw out the case. Although the trust sued in a Florida-based federal court, the parties’ contract stated that a party had only one year to bring a lawsuit arising from an alleged breach and that all disputes would be governed by Ohio law. Since Ohio law is very liberal in permitting contract parties to contract for shortened time periods for suing, the one-year deadline should apply and required the dismissal of the case, according to the bank.
Both the federal district judge and the 11th Circuit Court of Appeals, whose rulings govern federal cases in Florida, Georgia, and Alabama, agreed with the bank. The one-year deadline provision in the contract was not hidden, was not unreasonable, and was not ambiguous.
The trust tried to argue that the one-year deadline provision was ambiguous. The courts were not persuaded. A big part of the trust’s lack of success on this point was the fact that the two litigants were on equal footing. If a contract exists between two parties, of which one is highly sophisticated and one is not, the law may give more leeway to an unsophisticated party. If, however, the commercial contract in question is one between two parties, both of whom are sophisticated entities, the courts will be less likely to give credence to these ambiguity arguments and more likely to enforce the contract exactly as written.
For the strong, diligent, and detail-oriented representation you need for your commercial contract issues, rely upon the experienced Atlanta contract litigation attorneys at Poole Huffman, LLC. Our attorneys have been helping our clients achieve their business interests for many years. 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