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.