Atlanta Business Litigation Attorneys Blog

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.

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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Whenever a party to a contract believes that the other side has failed to perform in accordance with the agreement, the results can be complicated. This is especially true if the law gives one party to the contract immunity from suit in certain situations. This is just one of many potential unique challenges that might emerge in a breach of contract situation. An experienced Georgia contract litigation attorney can help you be prepared for whichever unique challenges occur in your case.

One example of a case involving immunity was an Atlanta contractor’s breach of contract lawsuit related to its construction of a cultural center in the Atlanta area. The contractor signed a contract with Fulton County for the construction of a new “Aviation Community Cultural Center” near the Fulton County Airport. The contract included a time term, dictating that the contractor was required to complete its work within 287 days of the date that the county gave it the green light to start work, or the date work actually began, whichever was first.

The contract did contemplate that the work could take longer. The agreement allowed for what’s called a “change order,” which in this case must be a written document signed by both parties, extending the time for completing the work due to changes in project scope, or the emergence of other delay-inducing issues outside the control of the contractor.

You’ve worked to consummate a commercial agreement. Both sides have signed, and you’ve done the work. Now the other side won’t pay and says that the person who signed wasn’t authorized and that there is no binding obligation to tender payment to you. When faced with this situation, you may find yourself needing to litigate to obtain the payment owed to you. When you encounter these and other conflicts, you need experienced Georgia business litigation counsel to handle your case.

A case in which the hypothetical described above happened in real life was when the owner of a north Georgia-based truck parts company requested a proposal from a demolition contractor regarding some work needed on the parts company’s property. Eventually, the contractor made the proposal to the parts company’s owner, Patricia, and one of her employees, Edwin. Edwin signed the proposal in Patricia’s presence while Patricia was on the phone. Having seen Edwin sign proposals for the parts company before, the contractor did not demand that Patricia sign. Instead, the contractor simply got started and completed all of the work outlined in the proposal.

After the work was done, the contractor delivered an invoice to the parts company, but the contractor did not receive payment, so it sued. At trial (and on appeal), the parts company argued that it never had any obligation to pay the contractor because Edwin had no actual or apparent authority to enter into contracts on behalf of his employer. Actual authority refers to situations in which an entity either expressly or impliedly gives specific powers to someone, who takes on the role of an agent of the entity. Apparent authority occurs in situations in which a third party would reasonably believe that the would-be agent had authority to act on behalf of the entity.

When you are seeking relief because your contract partner has breached your agreement, there are several ways to achieve success. Some cases require a full trial, with many days of arguments, witness examination and cross-examination, experts and presentation of other evidence, followed by a judgment by the jury (or the judge if it’s a bench trial.) In other cases, you may be able to achieve success by filing a motion for summary judgment and winning that motion, which sidesteps the need for a trial on the issue of liability. Whatever route your case requires, be sure you have legal representation from a skilled Atlanta commercial litigation attorney to guide throughout the process.

To win a motion for summary judgment in a breach of contract case under Georgia law, you need several things. You need proof of the existence of a legally valid contract, evidence that the other side breached the agreement and proof that that breach harmed your business. A failure on any one of these three areas can be fatal to your case.

A recent federal case, however, demonstrates what can happen when you do have all of these required things. The case pitted a prison management firm against its former food distributor. The two sides inked a supply agreement in 2007 and amended it in 2008. Ten years after signing the amended agreement, the distributor sent an email announcing an immediate termination of the contract, declaring that the arrangement was no longer profitable for its business.

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Whether you are litigating in federal court or Georgia state court, it is very important to ensure that your side is in total compliance with all statutory demands and procedural requirements. Failing to meet the obligations of these rules can have disastrous consequences for your case. In some situations, even slight missteps could cost you thousands of dollars (or more). Make sure that your interests are completely protected by retaining a skilled Georgia business attorney to handle your case for you.

One recent federal case from the 11th Circuit Court of Appeals demonstrates how damaging a lack of complete procedural compliance can be. The case began when a motel group filed a lawsuit against an insurance company, alleging that the insurance company was liable for breach of contract. The lawsuit started out in Florida state court in 2013, but, as is the case with many commercial litigation actions, the case qualified for removal to federal court, which the insurance company sought in this situation.

Ten days after the removal to federal court, the insurance company submitted to the motel group a settlement proposal that complied with the Florida statutes and the Federal Rules of Civil Procedure. Florida Statutes Section 768.79 gives the recipient 30 days to respond. The motel group did not respond in that time-frame.

Here in Georgia, the law gives you very broad freedom when it comes to setting up contracts. Generally, you can make your contract say whatever you want, unless it violates the law or violates public policy. This can be a major benefit to you. If you have the right representation from a skilled Atlanta commercial contracts attorney and you get an agreement that clearly protects your interests and plainly places your expectations and objectives down in “black and white,” then you can proceed with confidence that, if necessary later, you can get those terms enforced in court.

A recent contracts case before the Georgia Court of Appeals highlights this. The parties in the dispute were a Rockdale County motorsports vehicle dealership and an Atlanta-based administrator of vehicle service contracts and extended warranties. The parties’ contract called for the administrator to offer its services through vehicle dealerships, and for the dealerships and the administrator to share in the profits.

After a few years, certain sums, which previously had been paid to the administrator, were subsequently directed to a reinsurer controlled by the Rockdale County dealership’s owner. Eventually, the relationship went south, and the reinsurer initiated an arbitration action. The reinsurer argued that the administrator improperly took in fees not authorized by the contract. After the hearing, the arbitrator agreed with the reinsurer and ordered the administrator to pay $462,000 in damages.

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