Georgia Construction, Bond & Lien Law Blog


Outline for Georgia Construction Contracts

Posted in Contracts by Blue Blog on the September 2nd, 2015

The Cobb Law Group makes every effort to get its readers informed about changes in the law, but occasionally, we offer basic guides to improve the foundations of business.  Thus, beginning with this blog entry, we embark on a multi-blog article on Georgia contracts and, specifically, Georgia contracting in Georgia.

How to Draft a Good Construction Contract in Georgia

Thus, the following is Georgia Contracts Skeleton Outline which we intend to use as a framework for building this on-going series of useful articles:
I.Enforceable Contract
A. Agreement
i. Offer
1. Requirements
a. Common law (contracts for services and property sales) – all essential terms required
b. UCC (contracts for the sale of goods) – “gap fill” missing elements
2. Terminate
a. Revocation
b. Construction revocation
c. Rejection
d. Counteroffer
e. Offeror’s death
f. Reasonable time passes3. Irrevocable
a. Option
b. UCC firm offer
c. Performance of unilateral offer
d. Detrimental reliance
ii. Acceptance
1. Requirements
a. Follow rules of offer
b. Mailbox rule – accepted when sent
2. By silence
a. Unilateral rewards or offers
b. Unilateral offer geographically close
c. Past history of silent acceptance
d. Offer requires and offeree intends
3. Implied-in-fact
iii. Counteroffer
1. Common law – mirror image requirement
2. UCC
a. No mirror image requirement
b. Knock-out rule
c. Battle of the forms
d. New terms associated if:
• Both parties merchants
• No material change
• Offeror didn’t limit to original terms
• No objection in reasonable time
B.  Consideration
i. Includes:
1. Under seal
2. Bargained for detriment or benefit
ii. Consideration substitute
1. Promissory estoppel
2. Quasi-contract
iii. If contract modified
1. Common law – pre-existing duty plus (1) change of performance, (2) third party agreement to pay, or (3) unforeseen difficulties
2. UCC – no consideration needed for good faith modification
C. Defenses
i. Misunderstanding
ii. Incapacity
1. Infancy (with exceptions)
2. Mentally ill
3. Intoxication (with exceptions)
iii. Mistake
1. Mutual (not enforceable in Georgia)
2. Unilateral
iv. Fraud – plus offer to restore
1. Actual
2. Constructive
3. Concealment
v. Duress
vi. Illegality
vii. Unconscionability
D. Statute of Frauds
i. Applies to:
1. Contracts for marriage
2. Suretyship
3. Contracts that cannot be performed in under one year
4. UCC contracts for over $500
5. Real property interest transfer
6. Promise by executor, administrator, guardian, or trustee to pay for damages from their estate (in Georgia)
7. Revive debt barred by Statute of Limitations (in Georgia)
8. Money lending (in Georgia)
ii. Satisfied
1. Common law
a. Service contract – full performance or signed contract
b. Real estate contract
• Signed contract
• Partial performance plus two: (1) possession, (2) payment, (3) improvement made
2. UCC
a. Signed writing with quantity of goods
b. Performance (for delivered and accepted units)
iii. Modified contract – must be in writing if the new contract would qualify for Statute of Frauds
II. Contract Performed or Excused
A. Parole Evidence Rule
i. Complete integration of agreement in writing
ii. Applies to evidence from before writing
iii. Not applicable if prior evidence is to show:
1. Contract formation defense
2. Separate deal
3. Clarify ambiguous term
B. Warranties (UCC only)
i. Express (not opinion)
ii. Implied merchantability (if seller is merchant)
iii. Implied fitness for a particular purpose (in Georgia – only applies to immediate seller and buyer/buyer’s family/household guests)
iv. Title
C. Conditions
i. Express – objective standard of satisfaction
ii. Implied
1. Common law
a. IF substantial performance and no material breach
b. THEN recover cost of completion or diminution in market value
2. UCC
a. Perfect tender required for goods and delivery (except for installment contract)
b. Risk of loss: (1) determined by contract, (2) breaching party, (3) buyer if shipment contract, seller if destination contract, (4) merchant until buyer obtains goods, (5) buyer when goods tendered
D. Excuses to performance
i. Impracticability – requires statute or contract provision allowing in Georgia
ii. Impossibility – unless promisor’s proper prudence could have avoided in Georgia
iii. Death of required specific performer
iv. Frustration of purpose
v. Cancel contract if performance remains on both sides
vi. Accord and satisfaction
vii. Novation
viii. Recission for fraud or nonperformance
ix. Release
1. Common law – writing and consideration
2. UCC – writing
x. Destruction of identified goods
III. Remedies for Breach
A. Anticipatory repudiation
B. Money damages
i. Expectation
1. Put non-breaching party in economic position as if contract performed
2. Limitations
a. Reasonable certainty
b. No unforeseen consequential damages
c. Mitigation efforts made
3. Special circumstances
a. Lost volume profits
b. Incomplete performance
c. Economic waist and diminution of market value
ii. Consequential – only if solely traced to breach or exact compensation in Georgia
iii. Reliance
iv. Restitution
v. Liquidated – if allowed for in contract, injury hard to estimate, damages intended (not penalty), reasonable pre-estimate of loss
vi. Punitive – willful, malicious, fraud, wantonness, oppression, or entire want of care that raises a presumption of conscious indifference
vii. Nominal – to cover the cost of action in Georgia
viii. Collateral source rule – admissible to show actual loss in Georgia
ix. Litigation expenses – if (1) bad faith in underlying behavior, (2) stubbornly litigious, or (3) caused unnecessary trouble and expense
C. Equitable Relief
i. Specific performance – for real estate (in Georgia must show tendered money) or unique goods
ii. Injunction
iii. Seller’s right of reclamation – UCC
1. Buyer insolvent at purchase
2. Demanded within 10 days receipt, AND
3. Buyer still has goods
iv. Buyer’s replevin for identified goods – UCC
1. Seller insolvent within 10 days, or
2. Seller failed delivery of family goods, or
3. Specifically identified goods that buyer can’t cover

IV.  Third Parties
A. Beneficiaries
i. Intended vs. incidental
ii. Promissory estoppel – third party aware and reasonably relied
iii. Vests if
1. Reasonable detrimental reliance
2. Manifestation of assent
3. Suit filed
B. Assignment
i. Transfer of rights
ii. In Georgia – once a party performs, that party may assign rights without consent of the other party and even if the contract says no assignment allowed (except for personal services or special skills contracts)
iii. Multiple assignments
1. If no consideration, last assignment has priority
2. If consideration given, first with consideration has priority
C. Delegation
i. If contract allows and no special/individual performance interest
ii. Delegating party still liable under the contract

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