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The Importance of Making Sure All Your Business Interests Are Fully Protected Within a Detailed Georgia Commercial Contract

Poole Huffman, LLC

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.

In some situations and under the terms of some commercial contracts, that might have been the end of the story and the end of the avenues of recourse available to the administrator. This administrator’s case was not one of those situations, however.

Instead, the administrator was able to get the ruling overturned by the Court of Appeals. One of the main reasons the administrator was successful was because it had a well-drafted, in-depth contractual agreement with the dealership. Specifically, the contract’s terms included something called a “rate card,” which was the price the dealer owed to the administrator on each vehicle service contract, and was based on the vehicle’s year, make and model. The agreement was also very clear that the parties were required to “utilize the pricing structures” reflected in the rate card.

The evidence produced throughout the case showed that the administrator never charged the reinsurer “anything other than the price reflected in the Rate Card, which was the price agreed to by the parties.”

The agreement had detailed and specific provisions related to the rate card and, under the auspices of those terms, the administrator’s conduct was completely compliant with the contract, so it could not owe any damages to the reinsurer.

As the appeals court noted, parties are free in Georgia “to contract as they see fit, and those contracts are binding and enforceable, provided they are consistent with law and public policy,” even if the agreement seems to be unfair or favor one party over the other. In other words, it is vitally important to make sure you “get it right” when it comes time to negotiate and draft your agreement to prevent a possible contract dispute in the future. For the skillful and effective legal representation you need to make that happen, count on the experienced commercial litigation attorneys at Poole Huffman, LLC to provide the reliable legal knowledgeable and advocacy your case deserves. Contact our attorneys online or by calling 404-373-4008 to schedule your confidential consultation.

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