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The Importance of Making Sure You’re Aware of All the Terms — Both Explicit and Implicit — of Your Commercial Contract in Georgia

Poole Huffman, LLC

Whenever you’re preparing to enter into a commercial contract, there are several things that must be done right. Two of these are (1) proper negotiating to get a satisfactory deal and (2) making certain that the written agreement reflects the deal that you negotiated. Each of these steps (and more) is a place where an effective Atlanta commercial contracts attorney can help you advance your business interests. Retaining the right attorney and getting the right contract are vital because once you sign, the courts are probably going to enforce whatever the terms are in the written agreement.

For an example, consider this federal court case between a Florida-based CBD oil distributor and a Central American hemp-based biotechnology supplier. The supplier and the distributor inked a deal in 2014 making the Florida company the exclusive distributor of the supplier’s products.

The relationship went south quickly. Four months after signing, the distributor canceled the contract, accusing the supplier of shipping impure CBD oil in contravention of the agreement’s requirements. The supplier fought back by demanding arbitration of its claims of breach of contract, conversion and tortuous interference. The dispute went to arbitration, where the supplier scored a resounding victory.

The distributor responded by arguing that the arbitration ruling shouldn’t be enforced because two of the supplier’s claims weren’t arbitrable. The distributor lost that appellate argument, as the 11th Circuit Court of Appeals (whose rulings directly impact federal cases in Georgia, Florida and Alabama) ruled for the supplier.

The key reason for the distributor’s defeat came down to the contract’s wording. That 2014 agreement stated that the “parties submit to exclusive International Arbitration through JAMS International using UNCITRAL rules in New York, New York.”

The contract language implicitly gave broad power to the arbitration tribunal

That language invoking the UNCITRAL (United Nations Commission on International Trade Law) rules was very important. What the distributor may or may not have realized was that, when it signed off on that language, it was agreeing, not just to arbitrate the disputes themselves, but also to allow the arbitration tribunal to decide whether a claim was or was not arbitrable. Moreover, under these rules, the arbitrator or arbitration panel could also rule on whether or not an arbitration agreement existed and, if so, whether or not it was valid.

This case tells us several things. For one thing, the ruling is a reminder that the 11th Circuit court is generally pro-arbitration, so if you have a contract that includes an arbitration agreement and you are seeking to arbitrate your dispute (while the other side is fighting to have the case heard in a federal trial court,) you have a relatively strong chance of success in the federal courts in Georgia.

Additionally, it is a reminder of how vital is to understand, not just the express contract terms to which you’re potentially agreeing, but the inherent implications that flow from that language. As soon as this distributor agreed to this arbitration language, it was agreeing, not only to arbitration of its contract disputes, but also to whether the parties had an arbitration agreement, whether the parties’ arbitration agreement was legally valid and whether a particular dispute was or was not within the arbitration tribunal’s jurisdiction.

Understanding all of those sorts of things is key to making an informed decision about whether to sign that contract. To be sure you have all the information you need to make a fully informed decision, look to the knowledgeable contract dispute attorneys at Poole Huffman, LLC to provide you with that sort of diligent and effective advice and counsel. Contact our attorneys online or by calling 404-373-4008 to schedule your confidential consultation.

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