GEORGIA CONTRACTING–BEWARE THE STATUTE OF FRAUDS!
By: Mark A. Cobb
Georgia Statute of Frauds
This economy has forced many Georgia businesses to review their practices and make adjustments for the economic realities associated with today’s market place. Clients frequently contact us about collecting a debt they are owed for services, labor or material which they have provided. In these instances, one of the first documents we want to review is the contract. I am constantly amazed how many businesses, contractors, and suppliers fail to use written contracts!
There is some good news, Georgia law does allow some oral contracts to be binding. Simply stated, this means that if you sold some supplies or if you provided labor or services to another and you haven’t been paid, you may be able to recoup your damages. Without a contract, however, you may face greater difficulty in proving the terms of your transaction, the costs of collection may be higher or more time-consuming, and you may prevent you from collecting interest and attorneys’ fees.
Not just any oral contract is binding, however. Georgia’s Statute of Frauds requires that certain contracts be in writing in order to be enforceable. Specifically, O.C.G.A. § 13-5-30 states the following contract must be reduced to writing:
(1) A promise by an executor, administrator, guardian, or trustee to answer damages out of his own estate;
(2) A promise to answer for the debt, default, or miscarriage of another;
(3) Any agreement made upon consideration of marriage, except marriage articles as provided in Article 3 of Chapter 3 of Title 19;
(4) Any contract for sale of lands, or any interest in, or concerning lands;
(5) Any agreement that is not to be performed within one year from the making thereof;
(6) Any promise to revive a debt barred by a statute of limitation; and
(7) Any commitment to lend money.
Georgia’s Statute of Frauds applies to many types of contacts in several areas of law; however, our business law clients and construction law clients probably recognize that many (and maybe all) of their contracts need to be in writing in order to not violate the Statute of Frauds.
PRACTICAL BUSINESS TIP # 1: With the assistance of a Georgia contract lawyer, develop a standardized business contract relevant to your industry, your customers, and your needs.
PRACTICAL BUSINESS TIP # 2: Review your existing contracts periodically (every year or so) and ask a Georgia contract lawyer to review it as well. Occasionally, there are changes in the law, judicial holdings, as well as changes in business practices which need to be incorporated into your existing contracts.
PRACTICAL BUSINESS TIP # 3: Repeat certain contract terms in the “small print” on your invoices including such items as (i) your payment terms, (ii) interests, (iii) collection costs, (iv) waivers and warranties–if you do this, however, make sure they are consistent with your contract as inconsistent terms may result in your inability to enforce the terms of your contract.
Contact a Qualified Georgia Construction Law Attorney
If you have any questions, please feel free to contact any of us at the Cobb Law Group. And, please share with us your stories or comments regarding any successes or failures you have had with your own contracts.