title-13•Title 13 — Contracts
Official Code of Georgia Annotated — Title 13. Contracts
Snapshot of the Georgia code as mirrored by FindLaw, current as of 2024-03-28.
A contract is an agreement between two or more parties for the doing or not doing of some specified thing.
(a) An executed contract is one in which all the parties thereto have performed all the obligations which they have originally assumed.
(b) An executory contract is one in which something remains to be done by one or more parties.
A contract of record is one which has been declared and adjudicated by a court having jurisdiction or which is entered of record in obedience to or in carrying out the judgment of a court.
A specialty is a contract under seal and is considered by the law as entered into with more solemnity, and consequently of higher dignity, than ordinary, simple contracts.
(a) All other contracts than those specified in Code Sections 13-1-2 through 13-1-4 are termed simple contracts.
(b) Simple contracts may either be in writing or rest only in words as remembered by witnesses.
Parol contracts shall include only contracts in words as remembered by witnesses.
(a) A contract may be absolute or conditional. In an absolute contract, every covenant is independent and the breach of one does not relieve the obligation of another. In a conditional contract, the covenants are dependent upon each other and the breach of one is a release of the binding force of all dependent covenants.
(b) The classification of every contract must depend upon a rational interpretation of the intention of the parties.
(a) A contract may be either entire or severable. In an entire contract, the whole contract stands or falls together. In a severable contract, the failure of a distinct part does not void the remainder.
(b) The character of the contract in such case is determined by the intention of the parties.
In some cases even an entire contract is apportionable, as where the price to be paid is not fixed, or is by the contract itself apportioned according to time; so, if the failure of one party to perform is caused by the act of the other, the contract may still be apportioned.
Where, in the exercise of the police power, a license is issued, the license is not a contract but only a permission to enjoy the privilege for the time specified, on the terms stated; and it may be abrogated.
(a) Obligations to pay attorney's fees upon any note or other evidence of indebtedness, in addition to the rate of interest specified therein, shall be valid and enforceable and collectable as a part of such debt if such note or other evidence of indebtedness is collected by or through an attorney after maturity, subject to subsection (b) of this Code section and to the following provisions:
(1) If such note or other evidence of indebtedness provides for attorney's fees in some specific percent of the principal and interest owing thereon, such provision and obligation shall be valid and enforceable up to but not in excess of 15 percent of the principal and interest owing on said note or other evidence of indebtedness;
(2) If such note or other evidence of indebtedness provides for the payment of reasonable attorney's fees without specifying any specific percent, such provision shall be construed to mean 15 percent of the first $500.00 of principal and interest owing on such note or other evidence of indebtedness and 10 percent of the amount of principal and interest owing thereon in excess of $500.00; and
(3) The holder of the note or other evidence of indebtedness or his or her attorney at law shall, after maturity of the obligation, notify in writing the maker, endorser, or party sought to be held on said obligation that the provisions relative to payment of attorney's fees in addition to the principal and interest shall be enforced and that such maker, endorser, or party sought to be held on said obligation has ten days from the receipt of such notice to pay the principal and interest without the attorney's fees. If the maker, endorser, or party sought to be held on any such obligation shall pay the principal and interest in full before the expiration of such time, then the obligation to pay the attorney's fees shall be void and no court shall enforce the agreement. The refusal of a debtor to accept delivery of the notice specified in this paragraph shall be the equivalent of such notice.
(b)(1) If, in a civil action, application of the provisions of paragraph (2) of subsection (a) of this Code section will result in an award of attorney's fees in an amount greater than $20,000.00, the party required to pay such fees may, prior to the entry of judgment, petition the court seeking a determination as to the reasonableness of such attorney's fees.
(2) In response to a petition filed under paragraph (1) of this subsection, the party requesting the attorney's fees shall submit an affidavit to the court with evidence of attorney's fees, and the party required to pay such fees may respond to such affidavit.
(3) The court may hold a hearing to decide the matter of attorney's fees or may award attorney's fees based on the written evidence submitted to the court. The amount of attorney's fees awarded shall be an amount found by the court to be reasonable and necessary for asserting the rights of the party requesting attorney's fees.
(4) This subsection shall not apply to a party against whom a default judgment is to be entered pursuant to Code Section 9-11-55.
(5) A civil action instituted solely for the purpose of invoking this subsection shall be void ab initio.
(c) Obligations to pay attorney's fees contained in security deeds and bills of sale to secure debt shall be subject to this Code section where applicable.
(d) The provisions of this Code section shall not authorize the recovery of attorney’s fees in any tort claim.
When an action is brought by an endorsee, an endorsement or assignment of any bill, bond, or note need not be proved unless denied under oath.
Payments of claims made through ignorance of the law or where all the facts are known and there is no misplaced confidence and no artifice, deception, or fraudulent practice used by the other party are deemed voluntary and cannot be recovered unless made under an urgent and immediate necessity therefor or to release person or property from detention or to prevent an immediate seizure of person or property. Filing a protest at the time of payment does not change the rule prescribed in this Code section.
(a) In addition to any other charges permitted for the advance of money or for the extension of credit, a lender or seller may collect a closing fee at the time of making a loan or extending credit in order to defray the costs of investigation and verification of a borrower's or purchaser's credit reports and references. Such closing fee may be for an amount up to 4 percent of the face amount of the loan or credit extension or total amount of the sales contract but shall not be more than $50.00. Such closing fee may be paid from the proceeds of the amount borrowed or added to the principal amount of the loan or credit extension.
(b) When any loan or sales contract upon which a closing fee has been charged is prepaid in full by any means within 90 days of the date of the loan or sales contract, the lender or seller shall refund or credit the borrower or purchaser with a pro rata portion of the closing fee; provided, however, that in such event, the lender or seller may retain an amount of not more than $25.00 from the collected closing fee.
(c) This Code section shall only apply to installment loans made pursuant to Chapter 3 of Title 7, retail installment and home solicitation sales contracts entered into pursuant to Article 1 of Chapter 1 of Title 10, and insurance premium finance agreements entered into pursuant to Chapter 22 of Title 33; provided, however, that a closing fee authorized under this Code section shall not constitute interest, a time price differential, a finance charge, or a service charge within the meaning of Code Section 7-3-15, 10-1-4, or 33-22-9.
(d) Nothing contained in Code Section 7-4-18 shall be construed to amend or modify the provisions of this Code section.
(a) As used in this Code section, the term:
(1) “Actual cost” means the amount paid by a third party for the processing of a payment made by electronic means. If a lender or merchant is a subsidiary of an entity that processes payments made by electronic means, the parent entity shall be considered a third party.
(2) “Payment by electronic means” means the remittance of an amount owed through the use of a credit card, debit card, electronic funds transfer, electronic check, or other electronic method.
(b) In addition to any other charges, interest, and fees permitted by law and subject to the terms and conditions of the debit card or credit card acceptance agreement, a lender or merchant may collect a nonrefundable convenience fee from any person electing to utilize an option of payment by electronic means. Such convenience fee shall be in an amount that represents the actual cost to a lender or merchant; provided, however, that in lieu of the actual cost, a lender or merchant is authorized to collect a convenience fee which does not exceed the average of the actual cost incurred for a specific type of payment made by electronic means for which such lender or merchant imposes a convenience fee.
(c) No convenience fee shall be charged unless a lender or merchant also provides a direct payment option by check, cash, or money order in which no convenience fee is imposed.
(d) Any lender or merchant imposing a convenience fee as provided for in this Code section shall provide clear disclosure of such fee prior to imposition. Such notice shall include the dollar amount of such fee, a statement that such fee is nonrefundable, and a statement that such fee is charged for payment by electronic means.
(e) This Code section shall apply only to loans made pursuant to Chapter 1 of Title 7, installment loans made pursuant to Chapter 3 of Title 7, retail installment and home solicitation sales contracts entered into pursuant to Article 1 of Chapter 1 of Title 10, motor vehicle sales financing contracts entered into pursuant to Article 2 of Chapter 1 of Title 10, and insurance premium finance agreements entered into pursuant to Chapter 22 of Title 33; provided, however, that a convenience fee authorized under this Code section shall not constitute interest, an additional charge, a time price differential, a finance charge, or a service charge within the meaning of Code Section 7-3-12, 10-1-4, 10-1-33, or 33-22-9.
(f) Nothing contained in Code Section 7-4-18 shall be construed to amend or modify the provisions of this Code section.
(a) As used in this Code section, the term:
(1) “Health spa” means an establishment which provides, as one of its primary purposes, services or facilities which are purported to assist patrons to improve their physical condition or appearance through change in weight, weight control, treatment, dieting, or exercise. Such term includes an establishment designated as a “reducing salon,” “health spa,” “spa,” “exercise gym,” “health studio,” or “health club,” or by other terms of similar import.
(2) “Service member” means an active duty member of the regular or reserve component of the armed forces of the United States, the Georgia National Guard, or the Georgia Air National Guard on ordered federal duty for a period of 90 days or longer.
(b) In addition to the contractual relief provided for under Code Sections 10-4-214, 44-7-22, and 46-5-8, and in furtherance of the Servicemembers Civil Relief Act, 50 U.S.C. Section 3901 et seq., any service member may terminate a contract pursuant to this Code section if such contract is for:
(1) The provision of television, video, or audio programming or internet access; or
(2) Membership or provision of services by a health spa, notwithstanding any provisions of Code Section 10-1-393.2.
(c) Termination of a contract pursuant to subsection (b) of this Code section shall be effective only if the service member receives military orders to relocate for a period of service of at least 90 days to a location that does not support the contract.
(d) In terminating a contract pursuant to subsection (b) of this Code section, the service member shall provide the other contractual party with a written or electronic notice of termination to be effective on the date stated in the notice. Such notice shall be accompanied by either a copy of the official military orders or a written verification signed by the service member's commanding officer indicating the relocation.
(e) The provisions of this Code section shall apply to all contracts, and a renewal, modification, or extension of any contract, provided for under subsection (b) of this Code section and entered into on or after July 1, 2019. The provisions of this Code section may not be waived or modified by the agreement of the parties under any circumstances.
The construction of a contract is a question of law for the court. Where any matter of fact is involved, the jury should find the fact.
The following rules, among others, shall be used in arriving at the true interpretation of contracts:
(1) Parol evidence is inadmissible to add to, take from, or vary a written contract. All the attendant and surrounding circumstances may be proved and, if there is an ambiguity, latent or patent, it may be explained; so, if only a part of a contract is reduced to writing (such as a note given in pursuance of a contract) and it is manifest that the writing was not intended to speak the whole contract, then parol evidence is admissible;
(2) Words generally bear their usual and common signification; but technical words, words of art, or words used in a particular trade or business will be construed, generally, to be used in reference to this peculiar meaning. The local usage or understanding of a word may be proved in order to arrive at the meaning intended by the parties;
(3) The custom of any business or trade shall be binding only when it is of such universal practice as to justify the conclusion that it became, by implication, a part of the contract, except in regard to those transactions covered by Title 11;
(4) The construction which will uphold a contract in whole and in every part is to be preferred, and the whole contract should be looked to in arriving at the construction of any part;
(5) If the construction is doubtful, that which goes most strongly against the party executing the instrument or undertaking the obligation is generally to be preferred;
(6) The rules of grammatical construction usually govern, but to effectuate the intention they may be disregarded; sentences and words may be transposed, and conjunctions substituted for each other. In extreme cases of ambiguity, where the instrument as it stands is without meaning, words may be supplied;
(7) When a contract is partly printed and partly written, the latter part is entitled to most consideration;
(8) Estates and grants by implication are not favored; and
(9) Time is not generally of the essence of a contract; but, by express stipulation or reasonable construction, it may become so.
The cardinal rule of construction is to ascertain the intention of the parties. If that intention is clear and it contravenes no rule of law and sufficient words are used to arrive at the intention, it shall be enforced irrespective of all technical or arbitrary rules of construction.
The intention of the parties may differ among themselves. In such case, the meaning placed on the contract by one party and known to be thus understood by the other party at the time shall be held as the true meaning.
To constitute a valid contract, there must be parties able to contract, a consideration moving to the contract, the assent of the parties to the terms of the contract, and a subject matter upon which the contract can operate.
The consent of the parties being essential to a contract, until each has assented to all the terms, there is no binding contract; until assented to, each party may withdraw his bid or proposition.
If an offer is made by letter, an acceptance by written reply takes effect from the time it is sent and not from the time it is received; hence, withdrawal of the offer by the offeror after that time is ineffective. If an offer contains alternative propositions, the party receiving the offer may elect between the alternative propositions.
Conditions may be precedent or subsequent. A condition precedent must be performed before the contract becomes absolute and obligatory upon the other party. The breach of a condition subsequent may destroy the party's rights under the contract or may give a right to damages to the other party, according to a true construction of the intention of the parties.
Impossible, immoral, and illegal conditions are void and are binding upon no one.
(a) Generally the contract of a minor is voidable. If in a contractual transaction a minor receives property or other valuable consideration and, after arrival at the age of 18, retains possession of such property or continues to enjoy the benefit of such other valuable consideration, the minor shall have thereby ratified or affirmed the contract and it shall be binding on him or her. Such contractual transaction shall also be binding upon any minor who becomes emancipated by operation of law or pursuant to Article 10 of Chapter 11 of Title 15.
(b) The contract of a minor for necessaries shall be binding on the minor as if the minor were 18 years of age except that the party furnishing them to the minor shall prove that the parent or guardian of such minor had failed or refused to supply sufficient necessaries for the minor, that the minor was emancipated by operation of law, or the minor was emancipated pursuant to Article 10 of Chapter 11 of Title 15.
If a minor, by permission of his parent or guardian or by permission of law, practices any profession or trade or engages in any business as an adult, he shall be bound for all contracts connected with such profession, trade, or business.
Marriage contracts and settlements made by persons who are minors but of lawful age to marry are binding as if made by adults.
Any contract, promissory note, written obligation, or other evidence of indebtedness made and executed by a minor for a loan from any trust fund for educational purposes to any educational institution shall be as valid and binding as if said minor were sui juris at the time of making such contract or other obligation and otherwise capacitated to contract.
(a) The contract of an insane, a mentally ill, an intellectually disabled, or a mentally incompetent person who has never been adjudicated to be insane, mentally ill, intellectually disabled, or mentally incompetent to the extent that he is incapable of managing his estate as prescribed by this Code is not absolutely void but only voidable, except that a contract made by such person during a lucid interval is valid without ratification.
(b) After the fact that a person is insane, mentally ill, intellectually disabled, or mentally incompetent to the extent that he is incapable of managing his estate has been established by a court of competent jurisdiction in this state and the affairs of such person are vested in a guardian, the power of such person to contract, even though restored to sanity, shall be entirely gone; any contracts made by such person shall be absolutely void until the guardianship is dissolved. One may recover for necessaries furnished an insane person, a mentally ill person, an intellectually disabled person, or a mentally incompetent person upon the same proof as if furnished to minors.
A contract made by an intoxicated person is not void, though the intoxication is brought about by the other party, but is merely voidable at the election of the intoxicated person and may be ratified by him expressly or by conduct inconsistent with its rescission.
(a) A consideration is essential to a contract which the law will enforce. An executory contract without such consideration is called nudum pactum or a naked promise.
(b) In some cases a consideration is presumed, and an averment to the contrary will not be received.
Considerations are distinguished into “good” and “valuable.” A good consideration is such as is founded on natural duty and affection or on a strong moral obligation. A valuable consideration is founded on money or something convertible into money or having a value in money, except marriage, which is a valuable consideration.
(a) To constitute consideration, a performance or a return promise must be bargained for by the parties to a contract.
(b) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.
(c) The performance may consist of:
(1) An act other than a promise;
(2) A forbearance; or
(3) The creation, modification, or destruction of a legal relation.
(d) The performance or return promise may be given to the promisor or to some other person. If there is a valid consideration for a promise, it does not matter from whom it moves and it may be given by the promisee or by some other person; the promisee may sustain his action, though a stranger to the consideration.
(e) In mutual subscriptions for a common object, the promise of the others is a good consideration for the promise of each.
If the requirement of consideration is met, there is no additional requirement of a gain, advantage, or benefit to the promisor or of a loss, disadvantage, or detriment to the promisee.
(a) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.
(b) A charitable subscription or a marriage settlement is binding under subsection (a) of this Code section without proof that the promise induced action or forbearance.
If the consideration is good in part and void in part, the promise will or will not be sustained, depending upon whether it is entire or severable. If the consideration is illegal in whole or in part, the whole promise fails.
Mere inadequacy of consideration alone will not void a contract. If the inadequacy is great, it is a strong circumstance to evidence fraud; and, in an action for damages for breach of a contract, the inadequacy of consideration will always enter as an element in estimating the damages.
An impossible consideration is insufficient to sustain any promise; however, if the consideration is possible but improbable, it is sufficient to sustain the promise.
If a written contract is altered intentionally and in a material part thereof by a person claiming a benefit under it with intent to defraud the other party, the alteration voids the whole contract, at the option of the other party. If the alteration is unintentional or by mistake or in an immaterial matter or not with intent to defraud and if the contract as originally executed can be discovered and is still capable of execution, it shall be enforced by the court. If the alteration is made by a stranger and not at the instance or by collusion of a party or privy and if the original words can be restored, the contract shall be enforced.
The materiality of an alteration is a question of law for the court; the fact of an alteration is a question for the jury.
If the contract is not set forth as the basis of the action, so as to require a denial under oath, an alteration in a material part requires explanation before it can be admitted as evidence. This preliminary proof shall be submitted to the court.
Where parties, in the course of the execution of a contract, depart from its terms and pay or receive money under such departure, before either can recover for failure to pursue the letter of the agreement, reasonable notice must be given to the other of intention to rely on the exact terms of the agreement. The contract will be suspended by the departure until such notice.
A simple contract regarding the same matter and based on no new consideration does not destroy another simple contract between the same parties; but, if new parties are introduced so as to change the person to whom the obligation is due, the original contract is at an end.
Performance, to be effectual, must be accomplished by the party bound to perform, or by his agent where personal skill is not required, or by someone substituted, by consent, in his place, and must be substantially in compliance with the spirit and the letter of the contract and completed within a reasonable time.
If performance of the terms of a contract becomes impossible as a result of an act of God, such impossibility shall excuse nonperformance, except where, by proper prudence, such impossibility might have been avoided by the promisor.
Where the conditions as to performance of a contract are concurrent, if one party offers to perform and the other refuses to perform, the first shall be discharged from the performance of his part of the contract and may maintain an action against the other.
If the nonperformance of a party to a contract is caused by the conduct of the opposite party, such conduct shall excuse the other party from performance.
A tender properly made may be equivalent to performance. The tender must be certain and unconditional, except for a receipt in full or delivery of the obligation, and may be made by an agent and to an agent authorized to receive. The tender must be in full payment of the specific debt, and not in part, and may be made at any time before trial. If tender is rejected on grounds unrelated to informality, informality cannot afterward be raised in objection to the tender.
A valid tender of chattels transfers the title thereto to the person bound to receive; and the possession of the promisor, if he retains possession from that time, is for the benefit of the owner but without liability to account for profits or for more than ordinary prudence in preservation and protection of the chattels.
If the promise of a party is to deliver on demand, the demand must be reasonable as to time, place, and manner; if the promise is to deliver at a certain time and place, a tender at the time and place is effective though the receiver is not present.
Payment of money due to a creditor or his agent shall be sufficient to discharge the debtor upon the obligation; and, if such agent receives property other than currency in satisfaction of the obligation, the creditor is bound thereby.
Payment by mail shall be made at the risk of the debtor unless done by direction, either express or implied, of the creditor or his agent.
When a payment is made by a debtor to a creditor holding several demands against him, the debtor shall have the right to direct the claim to which it shall be appropriated. If the debtor fails to do so, the creditor shall have the right to appropriate the payment at his election. If neither party exercises the privilege, the law shall direct the application in such manner as shall be reasonable and equitable, both as to the parties and third persons, provided that, as a general rule, the oldest lien and the oldest item in an account shall be paid first, the presumption of law being that such is the intention of the parties.
(a) When a contract calls for one party to reimburse the other party for the federal manufacturer's excise tax levied by Part III of Subchapter A of Chapter 32 of the United States Internal Revenue Code, whether as a separate item or as part of the price, there shall exist for the party making the reimbursement a contractual right relating to the timing of that payment which can be invoked at the option of such party as provided in subsection (b) of this Code section.
(b) The party making the reimbursement shall not be required to tender payment for such taxes more than one business day prior to the time that the other party is required to remit such taxes to the United States Internal Revenue Service.
(c) Should a party choose to exercise the option provided in subsections (a) and (b) of this Code section, the other party may demand security for the payment of the taxes in proportion to the amount such taxes represent compared to the security demanded on the contract as a whole. Such party, however, may not change the other payment terms of the contract without a valid business reason other than to exercise the option as provided in subsections (a) and (b) of this Code section except to require the payment of such taxes under such option to be made by electronic transfer of funds.
(d) The party exercising the option set out in subsections (a) and (b) of this Code section shall notify the other party in writing of the intent to exercise such payment option and the effective date of the exercise which shall be no earlier than 30 days after the notice of intent is received or the beginning of the next federal tax quarter, whichever is later.
(e) This Code section shall apply to all contracts now in effect which have no expiration date and are continuing contracts and to all other contracts entered into or renewed after July 1, 1993. Any contract in force and effect on July 1, 1993, which, by its own terms will terminate on a date subsequent thereto, shall be governed by the law as it existed prior to July 1, 1993.
(f) The option set out in subsections (a) and (b) of this Code section shall not be construed to impair the obligations arising under any contract executed prior to July 1, 1993. Should the option set out in subsections (a) and (b) of this Code section be exercised, it shall not relieve such party of the obligation to make the reimbursement as provided for in the contract but shall affect only the timing of when that reimbursement must be tendered.
A contract may be rescinded at the instance of the party defrauded; but, in order to rescind, the defrauded party must promptly, upon discovery of the fraud, restore or offer to restore to the other party whatever he has received by virtue of the contract if it is of any value.
Except as otherwise provided in Title 11, the “Uniform Commercial Code,” where a contract of sale is rescinded for fraud, the rights of the vendor reclaiming the goods are superior to those of one who has acquired the goods or a lien thereon in consideration of an antecedent debt.
A party may rescind a contract without the consent of the opposite party on the ground of nonperformance by that party but only when both parties can be restored to the condition in which they were before the contract was made.
A release may result by operation of law. When a creditor releases another who is bound jointly with or primarily to a debtor or accepts from a debtor a higher security for the same debt, not intended to be collateral thereto, a release results by operation of law.
A covenant never to sue is equivalent to a release as is a bond to indemnify a debtor against his own debt.
Intermarriage of the parties generally releases a debt created prior to marriage. However, intermarriage of the parties shall not release a debt arising from an antenuptial agreement, as such term is defined in Code Section 19-3-60.
An accord may not amount to an extinguishment of the original debt but may extend only to suspend the execution or collection thereof for a limited time; in the meantime, an action on the original debt cannot be sustained.
Accord and satisfaction occurs where the parties to an agreement, by a subsequent agreement, have satisfied the former agreement, and the latter agreement has been executed. The execution of a new agreement may itself amount to a satisfaction of the former agreement, where it is so expressly agreed by the parties; and, without such agreement, if the new promise is founded on a new consideration, the taking of it is a satisfaction of the former agreement.
An accord and satisfaction must be of some advantage, legal or equitable, to the creditor or it shall not have the effect of barring him from his legal rights under the original agreement.
(a) Except as otherwise provided in this Code section, an agreement by a creditor to receive less than the amount of his debt cannot be pleaded as an accord and satisfaction unless it is actually executed by the payment of the money, the giving of additional security, the substitution of another debtor, or some other new consideration.
(b) Acceptance by a creditor of a check, draft, or money order marked “payment in full” or with language of equivalent condition, in an amount less than the total indebtedness, shall not constitute an accord and satisfaction unless:
(1) A bona fide dispute or controversy exists as to the amount due; or
(2) Such payment is made pursuant to an independent agreement between the creditor and debtor that such payment shall satisfy the debt.
An accord and satisfaction is binding upon both parties.
Any fact going to show that a contract was not obligatory, though executed, may be pleaded as a defense.
A person may plead his own incapacity to contract.
The exemption of a minor from contractual liability is a personal privilege. The party contracting with a minor may not plead it unless he was ignorant of the fact at the time of the contract nor may third persons avail themselves of it as a defense.
If the consideration upon which a contract is based was given as a result of a mutual mistake of fact or of law, the contract cannot be enforced.
Fraud renders contracts voidable at the election of the injured party.
Since the free assent of the parties is essential to a valid contract, duress, either by imprisonment, threats, or other acts, by which the free will of the party is restrained and his consent induced, renders the contract voidable at the election of the injured party. Legal imprisonment, if not used for illegal purposes, does not constitute duress.
A rescission of a contract by consent or a release by the other contracting party shall be a complete defense.
A condition, precedent or subsequent, not complied with, insufficiency or failure of consideration, or any act of the opposite party, by which the obligation of the contract has ceased, may be pleaded as a defense.
If the consideration for a promise, apparently good or valuable, fails either wholly or in part before the promise is executed, the failure of consideration may be pleaded in defense to the promise as provided for in subsection (c) of Code Section 9-11-8. If the failure of consideration is partial, an apportionment shall be made according to the facts of each case.
Where covenants are dependent, the failure of performance by the opposing party may be a good defense.
In a severable contract or one admitting of apportionment, a part performance may be a defense pro tanto.
(a) To make the following obligations binding on the promisor, the promise must be in writing and signed by the party to be charged therewith or some person lawfully authorized by him or her:
(1) A promise by a conservator, guardian, personal representative, or trustee to answer damages out of his or her own estate;
(2) A promise to answer for the debt, default, or miscarriage of another;
(3) Any agreement made upon consideration of marriage;
(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.
(b) Any agreement to modify, alter, cancel, repeal, revoke, release, or rescind a promise, agreement, contract, or commitment provided for in subsection (a) of this Code section must be in writing and signed by all parties to such agreement; provided, however, that if the party against whom enforcement of such agreement under this subsection is sought admits in a pleading, in testimony, or otherwise in court that the agreement was made, then such agreement is enforceable if valid in all other respects.
The provisions of Code Section 13-5-30 do not extend to the following cases:
(1) When the contract has been fully executed;
(2) Where there has been performance on one side, accepted by the other in accordance with the contract;
(3) Where there has been such part performance of the contract as would render it a fraud of the party refusing to comply if the court did not compel a performance.
Damages are given as compensation for the injury sustained as a result of the breach of a contract.
Damages recoverable for a breach of contract are such as arise naturally and according to the usual course of things from such breach and such as the parties contemplated, when the contract was made, as the probable result of its breach.
(a) Provisions in bonds stipulating the damages to be paid in the event of breach shall be deemed penalties and shall not be enforceable unless the amount stipulated is reasonably related to the amount of the loss resulting from the breach and the damages resulting from the breach are uncertain in nature or amount or are difficult of ascertainment.
(b) Where provisions in bonds stipulating damages to be paid in the event of breach do not comply with the requirements prescribed in subsection (a) of this Code section, only actual damages shall be recoverable in the event of a breach.
The question of damages being one for the jury, a reviewing court should not interfere unless the damages are either so small or so excessive as to justify the inference of gross mistake or undue bias.
Where by a breach of contract a party is injured, he is bound to lessen the damages as far as is practicable by the use of ordinary care and diligence.
In every case of breach of contract the injured party has a right to damages, but if there has been no actual damage, the injured party may recover nominal damages sufficient to cover the costs of bringing the action.
If the parties agree in their contract what the damages for a breach shall be, they are said to be liquidated and, unless the agreement violates some principle of law, the parties are bound thereby.
Remote or consequential damages are not recoverable unless they can be traced solely to the breach of the contract or unless they are capable of exact computation, such as the profits which are the immediate fruit of the contract, and are independent of any collateral enterprise entered into in contemplation of the contract.
Any necessary expense which one of two contracting parties incurs in complying with the contract may be recovered as damages.
Unless otherwise provided by law, exemplary damages shall never be allowed in cases arising on contracts.
The expenses of litigation generally shall not be allowed as a part of the damages; but where the plaintiff has specially pleaded and has made prayer therefor and where the defendant has acted in bad faith, has been stubbornly litigious, or has caused the plaintiff unnecessary trouble and expense, the jury may allow them.
If the defendant in an action for breach of contract, before trial, tenders to the plaintiff or deposits in court as much as or more than he finally recovers, no costs shall be recovered accruing subsequent to the tender or deposit.
In all cases where an amount ascertained would be the damages at the time of the breach, it may be increased by the addition of legal interest from that time until the recovery.
If a contract is entire, only one action may be maintained for a breach thereof; but, if it is severable or if the breaches occur at successive periods in an entire contract, an action will lie for each breach; but all the breaches occurring up to the commencement of the action must be included therein.
(a) Notwithstanding any criminal sanctions which may apply, any person who makes, utters, draws, or delivers any check, draft, or order upon any bank, depository, person, firm, or corporation for the payment of money, which drawee refuses to honor the instrument for lack of funds or credit in the account from which to pay the instrument or because the maker has no account with the drawee, and who fails to pay the same amount in cash to the payee named in the instrument within ten days after a written demand therefor, as provided in subsection (c) of this Code section, has been delivered to the maker by certified mail, or statutory overnight delivery shall be liable to the payee, in addition to the amount owing upon such check, draft, or order, for damages of double the amount so owing, but in no case more than $500.00, and any court costs incurred by the payee in taking the action. In addition to delivery of notice as provided for herein, notice may be given by first-class mail to the address printed on the check given by the maker at the time of issuance or, in the case of a draft or order, to the last known address. If the question of sufficiency of notice becomes an issue, when notice is by first-class mail, the sender of the purported notice shall give an affidavit, under oath, that notice was made as provided for herein and there shall be a rebuttable presumption that proper notice was given.
(b) The payee may charge the maker of the check, draft, or order a service charge not to exceed $30.00 or 5 percent of the face amount of the instrument, whichever is greater, plus the amount of any fees charged to the holder of the instrument by a bank or financial institution as a result of the instrument not being honored, when making written demand for payment.
(c) Before any recovery under subsection (a) of this Code section may be claimed, a written demand in substantially the form which follows shall be sent by certified mail, statutory overnight delivery, or first-class mail supported by an affidavit of service to the address printed or written on the check given by the maker at the time of issuance of the check or, in the case of a draft or order, to the last known address, the notice to be deemed conclusive ten days following the date the affidavit is executed, to the maker of the instrument at the address shown on the instrument:
“You are hereby notified that a check or instrument numbered __________, issued by you on __________(date), drawn upon __________(name of bank), and payable to , has been dishonored. Pursuant to Georgia law, you have ten days from receipt of this notice to tender payment of the full amount of the check or instrument plus a service charge of $30.00 or 5 percent of the face amount of the check or instrument, whichever is greater, plus the amount of any fees charged to the holder of the instrument by a bank or financial institution as a result of the instrument not being honored, the total amount due being $. Unless this amount is paid in full within the ten-day period, the holder of the check or instrument may file a civil suit against you for two times the amount of the check or instrument, but in no case more than $500.00, in addition to the payment of the check or instrument plus any court costs incurred by the payee in taking the action.”
(d) For purposes of this Code section, the holder of the dishonored check, draft, or order shall file the action in the county where the defendant resides.
(e) It shall be an affirmative defense, in addition to other defenses, to an action under this Code section if it is found that:
(1) Full satisfaction of the amount of the check or instrument plus the applicable service charge and any fees charged to the holder of the instrument by a bank or financial institution as a result of the instrument not being honored was made prior to the commencement of the action;
(2) The bank or depository erred in dishonoring the check or instrument; or
(3) The acceptor of the check or instrument knew at the time of acceptance that there were insufficient funds on deposit in the bank or depository with which to cause the check or instrument to be honored.
(f) In an action under this Code section, the court or jury may, however, waive all or part of the double damages upon finding that the defendant's failure to satisfy the dishonored check or instrument was due to the defendant receiving a dishonored check or instrument written to the defendant by another party.
(g) Subsequent to the commencement of the civil action under this Code section, but prior to the hearing, the defendant may tender to the plaintiff as satisfaction of the claim an amount of money equal to the sum of the amount of the dishonored check, service charges on the check, any fees charged to the holder of the instrument by a bank or financial institution as a result of the instrument not being honored, and any court costs incurred by the plaintiff in taking the action.
(h) In an action under this Code section, if the court or jury determines that the failure of the defendant to satisfy the dishonored check was due to economic hardship, the court or jury has the discretion to waive all or part of the double damages. However, if the court or jury waives all or part of the double damages, the court or jury shall render judgment against the defendant in the amount of the dishonored check plus service charges on the check plus any fees charged to the holder of the instrument by a bank or financial institution as a result of the instrument not being honored and any court costs incurred by the plaintiff in taking the action.
Setoff does not operate as a denial of the plaintiff's claim; rather it allows the defendant to set off a debt owed him by the plaintiff against the claim of the plaintiff.
Recoupment is a right of the defendant to have a deduction from the amount of the plaintiff's damages for the reason that the plaintiff has not complied with the cross-obligations or independent covenants arising under the contract upon which suit is brought.
Recoupment differs from setoff in this respect: Any claim or demand the defendant may have against the plaintiff may be used as a setoff, while only a claim or demand arising out of the same transaction as that sued on by the plaintiff may be used as a recoupment.
Setoff must be between the same parties and in their own right.
Between the parties themselves, any mutual demands existing at the time of the commencement of the suit may be set off.
If the plaintiff sues for the benefit of another person, a setoff against the beneficiary shall be allowed.
When suit is brought by a holder or transferee on a negotiable instrument received under dishonor, no setoff shall be allowed against the original payee except such as is in some way connected with the debt sued on or the transaction from which it sprang.
A debt of a testator or intestate is not a proper setoff against a debt contracted with the representative of the estate unless both were contracted during the lifetime of the decedent.
A legatee or owner of a distributive share in an estate may set off such share against a judgment against him unless special reason exists requiring the collection of the judgment.
The value of improvements made by one bona fide in possession under a claim of right may be set off against a claim for mesne profits.
If a plaintiff resides outside this state or is insolvent, the defendant may set off against him a debt not due under such equitable terms as may be prescribed by the court.
Recoupment lies for overpayments by the defendant or for payments by fraud, accident, or mistake.
Recoupment may be pleaded in all actions ex contractu where the plaintiff is liable to the defendant under the same contract.
If the damages of the defendant exceed those of the plaintiff, the defendant shall be awarded the amount of such excess from the plaintiff.
In the event of a conflict between this chapter and Chapter 11 of Title 9, the latter shall control to the extent of the conflict.
A contract to do an immoral or illegal thing is void. If the contract is severable, however, the part of the contract which is legal will not be invalidated by the part of the contract which is illegal.
(a) A contract that is against the policy of the law cannot be enforced. Contracts deemed contrary to public policy include but are not limited to:
(1) Contracts tending to corrupt legislation or the judiciary;
(2) Contracts in general restraint of trade, as distinguished from contracts which restrict certain competitive activities, as provided in Article 4 of this chapter;
(3) Contracts to evade or oppose the revenue laws of another country;
(4) Wagering contracts; or
(5) Contracts of maintenance or champerty.
(b) A covenant, promise, agreement, or understanding in or in connection with or collateral to a contract or agreement relative to the construction, alteration, repair, or maintenance of a building structure, appurtenances, and appliances, including moving, demolition, and excavating connected therewith, purporting to require that one party to such contract or agreement shall indemnify, hold harmless, insure, or defend the other party to the contract or other named indemnitee, including its, his, or her officers, agents, or employees, against liability or claims for damages, losses, or expenses, including attorney fees, arising out of bodily injury to persons, death, or damage to property caused by or resulting from the sole negligence of the indemnitee, or its, his, or her officers, agents, or employees, is against public policy and void and unenforceable. This subsection shall not affect any obligation under workers' compensation or coverage or insurance specifically relating to workers' compensation, nor shall this subsection apply to any requirement that one party to the contract purchase a project specific insurance policy, including an owner's or contractor's protective insurance, builder's risk insurance, installation coverage, project management protective liability insurance, an owner controlled insurance policy, or a contractor controlled insurance policy.
(c) A covenant, promise, agreement, or understanding in or in connection with or collateral to a contract or agreement for engineering, architectural, or land surveying services purporting to require that one party to such contract or agreement shall indemnify, hold harmless, insure, or defend the other party to the contract or other named indemnitee, including its, his, or her officers, agents, or employees, against liability or claims for damages, losses, or expenses, including attorney fees, is against public policy and void and unenforceable, except for indemnification for damages, losses, or expenses to the extent caused by or resulting from the negligence, recklessness, or intentionally wrongful conduct of the indemnitor or other persons employed or utilized by the indemnitor in the performance of the contract. This subsection shall not affect any obligation under workers' compensation or coverage or insurance specifically relating to workers' compensation, nor shall this subsection apply to any requirement that one party to the contract purchase a project specific insurance policy or project specific policy endorsement.
(a) Gambling contracts are void; and all evidences of debt, except negotiable instruments in the hands of holders in due course or encumbrances or liens on property, executed upon a gambling consideration, are void in the hands of any person.
(b) Money paid or property delivered upon a gambling consideration may be recovered from the winner by the loser by institution of an action for the same within six months after the loss and, after the expiration of that time, by institution of an action by any person, at any time within four years, for the joint use of himself and the educational fund of the county.
A stakeholder of money risked on a wager shall be obligated to repay the money to the party depositing it, upon demand, before it is actually paid to the winner; but if he pays the money to the winner bona fide, and without notice of the depositor's intention to retract, he shall not be liable for such payment.
The General Assembly finds that the distribution of equipment primarily designed for or used in agriculture in the State of Georgia vitally affects the general economy of the state and the public interest and public welfare and, in the exercise of its police power, it is necessary to regulate equipment primarily designed for or used in agriculture and related equipment manufacturers, distributors, dealers, and their representatives doing business in Georgia in order to prevent frauds, unfair business practices, unfair methods of competition, impositions, and other abuses upon its citizens.
As used in this article, the term:
(1) “Dealer” means any person who sells, maintains, solicits, or advertises the sale of new and used equipment to the consuming public. It shall not include (A) public officers while performing their duties as such officers; (B) persons making casual sales of their own equipment not subject to sales tax under the laws of the State of Georgia; (C) persons engaged in the auction sale of equipment; or (D) dealers in used equipment.
(2) “Dealership” means the business of selling or attempting to effect the sale by a dealer of new equipment or the right conferred by written or oral agreement with the manufacturer, distributor, or wholesaler for a definite or indefinite period of time to sell or attempt to effect the sale of new equipment.
(3) “Distributor” or “wholesaler” means any person, company, or corporation who sells or distributes new equipment to dealers and who maintains distributor representatives within the state.
(4) “Distributor branch” means a branch office maintained by a distributor or wholesaler which sells or distributes new equipment to dealers.
(5) “Distributor representative” means a representative employed by a distributor branch, distributor, or wholesaler.
(6) “Equipment” means tractors, farm equipment, or equipment primarily designed for or used in agriculture, horticulture, irrigation for agriculture or horticulture, and other such equipment which is considered tax exempt and sold by the franchised equipment dealer.
(7) “Factory branch” means a branch office maintained by a manufacturer which manufactures and assembles equipment for sale to distributors or dealers or which is maintained for directing and supervising the representatives of the manufacturer.
(8) “Factory representative” means a representative employed by a manufacturer or employed by a factory branch for the purpose of making or promoting the sale of equipment or for supervising, servicing, instructing, or contracting with equipment dealers or prospective dealers.
(9) “Franchise” means an oral or written agreement for a definite or indefinite period of time in which a manufacturer, distributor, or wholesaler grants to a dealer permission to use a trade name, service mark, or related characteristic, and in which there is a community of interest in the marketing of equipment or services related thereto at wholesale or retail, whether by leasing, sale, or otherwise.
(10) “Franchisee” means a dealer to whom a franchise is offered or granted.
(11) “Franchisor” means a manufacturer, distributor, or wholesaler who grants a franchise to a dealer.
(12) “Fraud” means, in addition to its normal legal connotation, the following: a misrepresentation in any manner, whether intentionally false or arising from gross negligence, of a material fact; a promise or representation not made honestly and in good faith; or an intentional failure to disclose a material fact.
(13) “Manufacturer” means any person engaged in the business of manufacturing or assembling new and unused equipment.
(14) “New equipment” means a unit of equipment which has not been previously sold to and put into regular use or service by any person except a distributor or wholesaler or dealer for resale.
(15) “Person” means a natural person, corporation, partnership, trust, or other business entity; and, in case of a business entity, it shall include any other entity in which it has a majority interest or which it effectively controls as well as the individual officers, directors, and other persons in active control of the activities of each such entity.
(16) “Relevant market area” means the geographic area for which a dealer is assigned responsibility for selling or soliciting or advertising the sale of equipment under the terms of a franchise.
(17) “Sale” means the issuance, transfer, agreement for transfer, exchange, pledge, hypothecation, or mortgage in any form, whether by transfer in trust or otherwise, of any unit of equipment or interest therein or of any franchise related thereto; any option, subscription or other contract, or solicitation looking to a sale; or an offer or attempt to sell in any form, whether in oral or written form.
(18) “Termination” of a contract or agreement means the termination, cancellation, nonrenewal, or noncontinuation of the contract or agreement.
Any person who engages directly or indirectly in purposeful contacts within this state in connection with the offering or advertising for sale of new equipment and parts shall be subject to the provisions of this article and shall be subject to the jurisdiction of the courts of this state upon service of process in accordance with the provisions of the laws of the State of Georgia.
Unfair methods of competition and unfair or deceptive acts or practices as defined in Code Section 13-8-15 are declared to be unlawful.
(a) It shall be deemed a violation of Code Section 13-8-14 for any manufacturer, factory branch, factory representative, distributor, or wholesaler, distributor branch, distributor representative, or dealer to engage in any action which is arbitrary, in bad faith, or unconscionable and which causes damage in terms of law or equity to any of the parties or to the public.
(b) It shall be deemed a violation of Code Section 13-8-14 for a manufacturer, a distributor, a wholesaler, a distributor branch or division, a factory branch or division, or a wholesale branch or division, or officer, agent, or other representative thereof, to coerce, or attempt to coerce, any dealer:
(1) To order or accept delivery of any unit of equipment, parts or accessories therefor, or any other commodity or commodities which such dealer has not voluntarily ordered; or
(2) To order or accept delivery of any equipment with special features, accessories, or equipment not included in the base list price of such equipment as publicly advertised by the manufacturer thereof.
(c) It shall be deemed a violation of Code Section 13-8-14 for a manufacturer, a distributor, a wholesaler, a distributor branch or division, a factory branch or division, or a wholesale branch or division, or officer, agent, or other representative thereof:
(1) To refuse to deliver in reasonable quantities and within a reasonable time after receipt of dealer's order to any dealer having a franchise or contractual agreement for the retail sale of new equipment sold or distributed by such manufacturer, distributor branch or division, factory branch or division, or wholesale branch or division any item of equipment covered by such franchise or contract specifically advertised or represented by such manufacturer, distributor, wholesaler, distributor branch or division, factory branch or division, or wholesale branch or division to be available for immediate delivery; provided, however, that the failure to deliver any such unit of equipment shall not be considered a violation of this article if such failure is due to prudent and reasonable restriction on extension of credit by the franchisor to the dealer, an act of God, work stoppage or delay due to a strike or labor difficulty, a bona fide shortage of materials, freight embargo, or other cause over which the manufacturer, distributor, or wholesaler, or any agent thereof, shall have no control;
(2) To coerce, or attempt to coerce, any dealer to enter into any agreement, whether written or oral, supplementary to an existing franchise with such manufacturer, distributor, wholesaler, distributor branch or division, factory branch or division, or wholesale branch or division, or officer, agent, or other representative thereof; or to do any other act prejudicial to such dealer by threatening to cancel any franchise or any contractual agreement existing between such manufacturer, distributor, wholesaler, distributor branch or division, factory branch or division, or wholesale branch or division, and such dealer; provided, however, that notice in good faith to any dealer of such dealer's violation of any terms or provisions of such franchise or contractual agreement shall not constitute a violation of this article if such notice is in writing mailed by registered or certified mail or statutory overnight delivery to such dealer at his or her current business address;
(3)(A) To terminate the franchise or selling agreement of any such dealer without due cause, as defined in subparagraph (C) of this paragraph. The termination of a franchise or selling agreement, without due cause, shall constitute an unfair termination, regardless of the specified time period of such franchise or selling agreement. Except where the grounds for such termination fall within division (iii) of subparagraph (C) of this paragraph, such manufacturer, distributor, wholesaler, distributor branch or division, factory branch or division, or wholesale branch or division, or officer, agent, or other representative thereof, shall notify a dealer in writing of the termination of the franchise or selling agreement of such dealer at least 90 days before the effective date thereof, stating the specific grounds for such termination; and in no event shall the contractual term of any such franchise or selling agreement expire, without the written consent of the dealer involved, prior to the expiration of at least 90 days following such written notice. During the 90 day period, either party may, in appropriate circumstances, petition a court to modify such 90 day stay or to extend it pending a final determination of such proceedings on the merits. The court shall have authority to grant preliminary and final injunctive relief. Should the dealer cure the claimed deficiency within the 90 day period, then the franchise or selling agreement shall not be terminated.
(B) Before termination of the franchise or selling agreement because of the dealer's failure to meet reasonable marketing criteria or market penetration, the manufacturer, distributor, wholesaler, distributor branch or division, factory branch or division, or wholesale branch or division, or officer, agent, or other representative thereof, shall provide written notice of such intention at least one year in advance. After such notice, the manufacturer or other entity issuing the notice shall make good faith efforts to work with the dealer to gain the desired market share including, without limitation, reasonably making available to the dealer an adequate inventory of new equipment and parts and competitive marketing programs. The manufacturer or other entity, at the end of the one-year notice period, may terminate or elect not to renew the agreement only upon further written notice specifying the reasons for determining that the dealer failed to meet reasonable criteria or market penetration. Such written notice must specify that termination is effective 90 days from the date of the notice. Either party may petition the court pursuant to subparagraph (A) of this paragraph for the relief specified therein. Should the dealer cure the claimed deficiency within the 90 day period, then the franchise or selling agreement shall not be terminated.
(C) As used in this paragraph, tests for determining what constitutes due cause for a manufacturer or distributor to terminate a franchise agreement shall include whether the dealer:
(i) Has transferred an ownership interest in the dealership without the manufacturer's or distributor's consent;
(ii) Has made a material misrepresentation in applying for or acting under the franchise agreement;
(iii) Has filed a voluntary petition in bankruptcy or has had an involuntary petition in bankruptcy filed against the dealer which has not been discharged within 30 days after the filing, is in default under the provisions of a security agreement in effect with the manufacturer or distributor, or is in receivership;
(iv) Has engaged in an unfair business practice;
(v) Has inadequately represented the manufacturer's or distributor's products with respect to sales, service, or warranty work;
(vi) Has engaged in conduct which is injurious or detrimental to the public welfare;
(vii) Has inadequate sales and service facilities and personnel;
(viii) Has failed to comply with an applicable licensing law;
(ix) Has been convicted of a crime, the effect of which would be detrimental to the manufacturer, distributor, or dealership;
(x) Has failed to operate in the normal course of business for seven consecutive business days;
(xi) Has relocated the dealer's place of business without the manufacturer's or distributor's consent; or
(xii) Has failed to comply with the terms of the dealership or franchise agreement;
(4) To resort to or use any false or misleading advertisement in connection with its business as such manufacturer, distributor, wholesaler, distributor branch or division, factory branch or division, or wholesale branch or division, or officer, agent, or other representative thereof;
(5) To offer to sell or to sell any new unit of equipment, or parts or accessories therefor, to any other dealer at a lower actual price therefor than the actual price offered to any other dealer for the same model equipment identically equipped; or to utilize any device including, but not limited to, sales promotion plans or programs which result in such lesser actual price; provided, however, that the provisions of this paragraph shall not apply to sales to a dealer for resale to any unit of the United States government, the state, or any of its political subdivisions; and provided, further, that the provisions of this paragraph shall not apply so long as a manufacturer, distributor, or wholesaler, or any agent thereof, sells or offers to sell such new equipment, parts, or accessories to all their franchised dealers at an equal price;
(6) To discriminate willfully, either directly or indirectly, in price, programs, or terms of sale offered to franchisees, where the effect of such discrimination may be to lessen competition substantially or to give to one holder of a franchise any business or competitive advantage not offered to all holders of the same or similar franchise;
(7) To prevent or attempt to prevent, by contract or otherwise, any dealer from changing the capital structure of his or her dealership or the means by or through which he or she finances the operation of his or her dealership, provided such dealer at all times meets any reasonable capital standards agreed to between the dealership and the manufacturer, distributor, or wholesaler and provided such change by the dealer does not result in a change in the executive management of the dealership;
(8) To prevent or attempt to prevent, by contract or otherwise, any dealer or any officer, partner, or stockholder of any dealer from selling or transferring any part of the interest of any of them to any other person or persons or party or parties; provided, however, that no dealer, officer, partner, or stockholder shall have the right to sell, transfer, or assign the franchise or power of management or control thereunder without the consent of the manufacturer, distributor, or wholesaler, except that such consent shall not be unreasonably withheld;
(8.1) To prevent a dealer from having an investment in or holding a dealership contract for the sale of competing product lines or makes of equipment, or to require a dealer to provide separate facilities for competing product lines or makes of equipment;
(8.2) To impose, directly or indirectly, unreasonable restrictions on the dealer relative to transfer, sale, renewal, termination, location, or site control;
(9) To obtain money, goods, services, anything of value, or any other benefit from any other person with whom the dealer does business or employs on account of or in relation to the transactions between the dealer, the franchisor, and such other person; or
(10) To require a dealer to assent to a release, assignment, notation, waiver, or estoppel which would relieve any person from liability imposed by this article.
(d) It shall be deemed a violation of Code Section 13-8-14 for a dealer:
(1) To require a retail purchaser of a new unit of equipment, as a condition of sale and delivery thereof, also to purchase special features, appliances, equipment, parts, or accessories not desired or requested by the purchaser; provided, however, that this prohibition shall not apply to special features, appliances, equipment, parts, or accessories which are already installed when the unit of equipment is received by the dealer from the manufacturer, distributor, or wholesaler thereof;
(2) To represent and sell as new and unused any unit of equipment which has been used and operated for demonstration or other purposes without stating to the purchaser the approximate amount of use the unit of equipment has experienced; or
(3) To resort to or use any false or misleading advertisement in connection with his or her business as such dealer.
Any manufacturer, distributor, or wholesaler which intends to establish a new dealership or to relocate a current dealership for a particular product line or make of equipment within the relevant market area of an existing dealership of the same product line or make of equipment shall give written 90 day notice of such intent by certified mail or statutory overnight delivery, return receipt requested, to such existing dealership. The notice shall include:
(1) The specific location of the additional or relocated dealership;
(2) The date on or after which the additional or relocated dealership will commence operation at the new location;
(3) The identity of all existing dealerships in whose relevant market area the new or relocated dealership is to be located; and
(4) The names and addresses of the dealer and principals in the new or relocated dealership.
(a) A manufacturer, distributor, or wholesaler may sell or lease new equipment for use within this state. If the equipment is prepared for delivery or serviced by a dealer, the manufacturer, distributor, or wholesaler shall reasonably compensate the dealer for the preparation and delivery of the new equipment and pay to the dealer a reasonable commission on the sale or lease of the new equipment which shall be not less than 8 percent of the sale price of the equipment. The manufacturer, distributor, or wholesaler, if practicable, shall utilize the dealer in the relevant market area described in subsection (b) of this Code section for preparation and delivery. This compensation must be paid or credited in the same manner as provided in Code Section 13-8-17. This subsection shall not be applicable to any liquidation or sale of equipment which has been ordered by any court.
(b) For purposes of this Code section, equipment is considered to be used primarily within a dealer's relevant market area if the new equipment is located or housed at a user's facility located within that relevant market area.
(a) Every manufacturer shall specify and every dealer shall provide and fulfill reasonable predelivery and preparation obligations for its equipment prior to delivery of same to retail purchasers.
(b) Every manufacturer shall provide for repair parts availability throughout the reasonable useful life of any equipment sold.
(c) Every manufacturer or distributor shall provide to each of its dealers, on an annual basis, an opportunity to return a portion of such dealer's surplus parts inventory for credit. The surplus parts return procedure shall be administered as follows:
(1) The manufacturer or distributor may specify and thereupon notify its dealers of a time period of at least 60 days' duration, during which time dealers may submit their surplus parts lists and return their surplus parts to the manufacturer or distributor;
(2) If a manufacturer or distributor has not notified a dealer of a specific time period for returning surplus parts within the preceding 12 months, then it shall authorize and allow the dealer's surplus parts return request within 30 days after receipt of such request from such dealer;
(3) Pursuant to the provisions of this subsection, a manufacturer or distributor must allow surplus parts return authority on a dollar value of parts equal to 8 percent of the total dollar value of parts purchased by the dealer from the manufacturer or distributor during the 12 month period immediately preceding the notification to such dealer by the manufacturer or distributor of the surplus parts return program, or the month such dealer's return request is made, whichever is applicable; provided, however, that such dealer may, at his or her option, elect to return a dollar value of his or her surplus parts less than 8 percent of the total dollar value of parts purchased by such dealer from the manufacturer or distributor during the preceding 12 month period as provided in this subsection;
(4) No obsolete or superseded part may be returned, but any part listed in the manufacturer's, wholesaler's, or distributor's current parts price list at the date of notification to the dealer by the manufacturer or distributor of the surplus parts return program, or the date of a dealer's parts return request, whichever is applicable, shall be eligible for return and credit as specified in this subsection; provided, however, that returned parts must be in new and unused condition and must have been purchased from the manufacturer, wholesaler, or distributor to whom they are returned;
(5) The minimum lawful credit to be allowed for returned parts shall be 85 percent of the wholesale cost thereof as listed in the manufacturer's, wholesaler's, or distributor's current parts price list at the date of the notification to the dealer by the manufacturer, wholesaler, or distributor of the surplus parts return program, or the date of a dealer's parts return request, whichever is applicable;
(6) Applicable credit pursuant to this subsection must be issued to the dealer within 30 days after receipt of his or her returned parts by the manufacturer or distributor; or
(7) Packing and return freight expense incurred in any return of surplus parts pursuant to the terms of this Code section shall be borne by the dealer.
(a) Every manufacturer, distributor, wholesaler, distributor branch or division, factory branch or division, or wholesale branch or division shall provide a fair and reasonable warranty agreement on any new unit of equipment which it sells and shall fairly compensate each of its dealers for labor and parts used in fulfilling such warranty agreement. All claims for payment under such warranty agreements made by dealers under this subsection for such labor and parts shall be paid within 30 days following their approval. All such claims shall be either approved or disapproved within 30 days after their receipt; and, when any such claim is disapproved, the dealer who submits it shall be notified in writing of its disapproval within such period; and each such notice shall state the specific grounds upon which the disapproval is based. Any special handling of claims required of the dealer by the manufacturer, distributor, wholesaler, distributor branch or division, factory branch or division, or wholesale branch or division, and not uniformly required of all dealers of that make, may be enforced only after 30 days' notice in writing to the dealer and upon good and sufficient reason.
(b) The minimum lawful basis for compensating said dealer for warranty work as provided for in this subsection shall be calculated for labor in accordance with the reasonable and customary amount of time required to complete such work, expressed in hours and fractions of hours multiplied by the dealer's established hourly retail labor rate. Prior to filing a claim for reimbursement for warranty work, the dealer must notify the applicable manufacturer, wholesaler, or distributor of his or her hourly retail labor rate. The minimum lawful basis for compensation to the dealer for parts used in fulfilling said warranty work shall be at the dealer's costs thereof, including all freight and handling charges applicable thereto, plus 15 percent of said sum to reimburse the dealer's reasonable costs of doing business and providing such warranty service on the manufacturer's behalf.
(c) It shall be unlawful to deny, delay payment for, or restrict a claim by a dealer for warranty service or parts, incentives, hold-backs, or other amounts owed to a dealer unless the denial, delay, or restriction is the direct result of a material defect in the claim that affects its validity.
(d) A manufacturer, distributor, or wholesaler may audit warranty claims submitted by its dealers only for a period of up to one year following payment of such claims and may charge back to its dealers only those amounts based upon paid claims shown by audit to be invalid; provided, however, that this limitation shall not apply in any case of fraudulent claims.
Any audit of a dealer by or on behalf of a manufacturer, distributor, or wholesaler for sales incentives, service incentives, rebates, or other forms of incentive compensation shall be completed not later than six months after the date of the termination of such incentive compensation program; provided, however, that this limitation shall not apply in any case of fraudulent claims.
The provisions of this article shall apply to all written or oral agreements between a manufacturer, wholesaler, or distributor with a dealer including, but not limited to, the franchise offering, the franchise agreement, sales of goods, services and advertising, leases or mortgages of real or personal property, promises to pay, security interests, pledges, insurance contracts, advertising contracts, construction or installation contracts, servicing contracts, and all other such agreements in which the manufacturer, wholesaler, or distributor has any direct or indirect interest.
It shall be unlawful for the manufacturer, wholesaler, distributor, or franchisor, without due cause, to fail to renew on terms then equally available to all its dealers, to terminate a franchise, or to restrict the transfer of a franchise unless the franchisee shall receive fair and reasonable compensation for the inventory of the business. As used in this Code section, “due cause” shall be construed in accordance with the definition of same as contained in subparagraph (c)(3)(C) of Code Section 13-8-15.
(a) In addition to temporary or permanent injunctive relief as provided in subparagraph (c)(3)(A) of Code Section 13-8-15, any person who shall be injured in his or her business or property by reason of anything forbidden by or in noncompliance with the requirements of this article may bring an action therefor in the appropriate superior court of this state and shall recover the actual damages sustained and the costs of such action, including a reasonable attorney's fee.
(b) When such action is one of common or general interest to many persons or when the parties are numerous and it is impracticable to bring them all before the court, one or more may bring a class action for the benefit of the whole, including actions for injunctive relief.
(c) In an action for money damages, if the jury finds that the defendant acted maliciously, the jury may award punitive damages as permitted by Georgia law.
Any contract or franchise agreement or part thereof or practice thereunder in violation of any provision of this article shall be deemed against public policy and shall be void and unenforceable.
(a) Whenever any dealer enters into a franchise agreement with a manufacturer, distributor, or wholesaler wherein the dealer agrees to maintain an inventory of equipment or repair parts and the franchise is subsequently terminated, the manufacturer, distributor, or wholesaler shall repurchase the inventory as provided in this article. The dealer may keep the inventory if he or she desires. If the dealer has any outstanding debts to the manufacturer, distributor, or wholesaler, then the repurchase amount may be credited to the dealer's account.
(b) The manufacturer, distributor, or wholesaler shall repurchase that inventory previously purchased from it and held by the dealer on the date of termination of the contract. The manufacturer, distributor, or wholesaler shall pay 100 percent of the actual dealer cost, including freight, of all new, unsold, undamaged, and complete units of equipment which are resalable and 100 percent of the current wholesale price of all new, unused, undamaged repair parts and accessories which are listed in the manufacturer's current parts price list. The manufacturer, distributor, or wholesaler shall pay the dealer 5 percent of the current wholesale price on all new, unused, and undamaged repair parts returned to cover the cost of handling, packing, and loading. The manufacturer, distributor, or wholesaler shall have the option of performing the handling, packing, and loading in lieu of paying the 5 percent sum imposed by this subsection for these services.
(c) Upon payment within a reasonable time of the repurchase amount to the dealer, the title and right of possession to the repurchased inventory shall transfer to the manufacturer, distributor, or wholesaler, as the case may be.
(d) The provisions of this article shall not require the repurchase from a dealer of:
(1) Any single repair part which is priced as a set of two or more items;
(2) Any repair part which, because of its condition, is not resalable as a new part without repackaging or reconditioning;
(3) Any inventory for which the dealer is unable to furnish evidence, reasonably satisfactory to the manufacturer, distributor, or wholesaler, of good title, free and clear of all claims, liens, and encumbrances;
(4) Any inventory which the dealer desires to keep, provided the dealer has a contractual right to do so;
(5) Any unit of equipment which is not in new, unused, undamaged, complete condition;
(6) Any repair parts which are not in new, unused, undamaged condition;
(7) Any inventory which was ordered by the dealer on or after the date of receipt of the notification of termination of the franchise; or
(8) Any inventory which was acquired by the dealer from any source other than the manufacturer, distributor, or wholesaler.
(e) If any manufacturer, distributor, or wholesaler shall fail or refuse to repurchase any inventory covered under the provisions of this article within 60 days after termination of a dealer's contract, it shall be civilly liable for 100 percent of the current wholesale price of the inventory plus any freight charges paid by the dealer, such dealer's reasonable attorney's fees, court costs, and interest on the current wholesale price computed at the legal interest rate from the sixty-first day after termination.
In the event of the death or incapacity of the dealer or the majority stockholder of a corporation operating as a dealer, the manufacturer, distributor, or wholesaler shall, at the option of the heirs at law, if the dealer died intestate, or the devisees or transferees under the terms of the deceased dealer's last will and testament, if said dealer died testate, repurchase the inventory from said heirs or devisees as aforesaid as if the manufacturer, distributor, or wholesaler had terminated the contract, and the inventory repurchase provisions of Code Section 13-8-22 are made expressly applicable hereto. The heirs or devisees as aforesaid shall have one year from the date of the death of the retailer or majority stockholder to exercise their option under this article; provided, however, that nothing in this article shall require the repurchase of inventory if the heirs or devisees as aforesaid and the manufacturer, distributor, or wholesaler enter into a new franchise agreement to operate the retail dealership.
A manufacturer, distributor, or wholesaler, as the case may be, will fully indemnify and hold harmless its dealer against any losses including, but not limited to: court costs and reasonable attorney's fees or damages arising out of complaints, claims, or lawsuits including, but not limited to, strict liability, negligence, misrepresentation, express or implied warranty, or rescission of the sale where the complaint, claim, or lawsuit relates to the manufacture, assembly, or design of new items covered by this article, parts or accessories, or other functions by the manufacturer, distributor, or wholesaler which are beyond the control of the dealer.
The provisions of this article shall apply to all contracts now in effect which have no expiration date and are a continuing contract and all other contracts entered into or renewed on or after July 1, 2002. Any contract in force and effect prior to July 1, 2002, which by its own terms will terminate on a date subsequent thereto shall be governed by the law as it existed prior to July 1, 2002.
The General Assembly finds that the distribution of farm equipment in the State of Georgia vitally affects the general economy of the state and the public interest and public welfare and, in the exercise of its police power, it is necessary to regulate farm equipment manufacturers, distributors, dealers, and their representatives doing business in Georgia in order to prevent frauds, unfair business practices, unfair methods of competition, impositions, and other abuses upon its citizens.
As used in this article, the term:
(1) “Distributor” or “wholesaler” means any person, company, or corporation who purchases farm equipment or implements or parts from a manufacturer and resells the same at wholesale to dealers.
(2) “Distributor or wholesaler branch” means a branch office maintained by a distributor or wholesaler which sells or distributes farm equipment or implements or parts to tractor or farm equipment dealers.
(3) “Distributor representative” means a representative employed by a distributor branch or distributor.
(4) “Factory branch” means a branch office maintained by a manufacturer which manufactures and assembles farm equipment or implements or parts for sale to distributors, tractor or farm equipment dealers, or wholesalers or which is maintained for directing and supervising the representatives of the manufacturer.
(5) “Factory representative” means a representative employed by a manufacturer or employed by a factory branch for the purpose of making or promoting the sale of farm equipment or implements or parts or for supervising, servicing, instructing, or contracting with farm equipment dealers or prospective dealers or wholesalers.
(6) “Farm equipment dealer” means any person who sells, solicits, or advertises the sale of farm equipment to the consuming public. It shall not include (A) receivers, trustees, administrators, executors, guardians, or other persons appointed by or acting under judgment, decree, or order of any court; (B) public officers while performing their duties as such officers; (C) persons making casual sales of their own item of farm equipment not subject to sales tax under the laws of the State of Georgia; (D) persons engaged in the auction sale of farm equipment; or (E) dealers in used farm equipment.
(7) “Farm equipment or implements” means those farm implements primarily designed for use in agriculture.
(8) “Franchise” means an oral or written agreement for a definite or indefinite period of time in which a manufacturer grants to a wholesaler permission to use a trade name, service mark, or related characteristic, and in which there is a community of interest in the marketing of farm equipment or implements or parts or services related thereto at wholesale whether by leasing, sale, or otherwise.
(9) “Franchisee” means a wholesaler to whom a franchise is offered or granted.
(10) “Franchisor” means a manufacturer who grants a franchise to a wholesaler.
(11) “Fraud” means, in addition to its normal legal connotation, the following: a misrepresentation in any manner, whether intentionally false or arising from gross negligence, of a material fact; a promise or representation not made honestly and in good faith; or an intentional failure to disclose a material fact.
(12) “Manufacturer” means any person engaged in the business of manufacturing or assembling farm equipment or implements or parts.
(13) “New farm equipment or implements” means a unit of farm equipment or implement which has not been previously sold to and put into regular use or service by any person except a wholesaler for resale.
(14) “Person” means a natural person, corporation, partnership, trust, or other business entity; and, in case of a business entity, it shall include any other entity in which it has a majority interest or effectively controls as well as the individual officers, directors, and other persons in active control of the activities of each such entity.
(15) “Sale” means the issuance, transfer, agreement for transfer, exchange, pledge, hypothecation, or mortgage in any form, whether by transfer in trust or otherwise, of any unit of farm equipment or implement or parts or interest therein or of any franchise related thereto; any option, subscription or other contract, or solicitation, looking to a sale, or offer or attempt to sell in any form, whether in oral or written form.
Any person who engages directly or indirectly in purposeful contacts within this state in connection with the offering or advertising for sale of farm machinery or implements and parts shall be subject to the provisions of this article and shall be subject to the jurisdiction of the courts of this state upon service of process in accordance with the provisions of the laws of the State of Georgia.
Unfair methods of competition and unfair or deceptive acts or practices as defined in Code Section 13-8-35 are declared to be unlawful.
(a) It shall be deemed a violation of Code Section 13-8-34 for any manufacturer, factory branch, factory representative, or wholesaler to engage in any action which is arbitrary, in bad faith, or unconscionable and which causes damage in terms of law or equity to any of the parties or to the public.
(b) It shall be deemed a violation of Code Section 13-8-34 for a manufacturer, a factory branch or division, or officer, agent, or other representative thereof, to coerce, or attempt to coerce, any wholesaler:
(1) To order or accept delivery of any unit of farm equipment or implements or parts or accessories therefor, or any other commodity or commodities which such wholesaler has not voluntarily ordered; or
(2) To order or accept delivery of any farm equipment or implements with special features, accessories, or equipment not included in the base list price of such farm equipment or implements as publicly advertised by the manufacturer thereof.
(c) It shall be deemed a violation of Code Section 13-8-34 for a manufacturer, a factory branch or division, or officer, agent, or other representative thereof:
(1) To refuse to deliver in reasonable quantities and within a reasonable time after receipt of wholesaler's order to any wholesaler having a franchise or contractual agreement for the sale of farm equipment or implements sold by such manufacturer or factory branch or division any item of farm equipment covered by such franchise or contract specifically advertised or represented by such manufacturer or factory branch or division to be available for immediate delivery; provided, however, the failure to deliver any such unit of farm equipment or implements shall not be considered a violation of this article if such failure is due to prudent and reasonable restriction on extension of credit by the franchisor to the wholesaler, an act of God, work stoppage or delay due to a strike or labor difficulty, a bona fide shortage of materials, freight embargo, or other cause over which the manufacturer or any agent thereof shall have no control;
(2) To coerce or attempt to coerce any wholesaler to enter into any agreement, whether written or oral, supplementary to an existing franchise with such manufacturer, factory branch or division, or officer, agent, or other representative thereof; or to do any other act prejudicial to such wholesaler by threatening to cancel any franchise or any contractual agreement existing between such manufacturer or factory branch or division, and such wholesaler; provided, however, that notice in good faith to any wholesaler of such wholesaler's violation of any terms or provisions of such franchise or contractual agreement shall not constitute a violation of this article if such notice is in writing mailed by registered or certified mail or statutory overnight delivery to such wholesaler at his current business address;
(3)(A) To terminate or cancel the franchise or selling agreement of any such wholesaler without due cause, as defined in subparagraph (B) of this paragraph. The nonrenewal of a franchise or selling agreement, without due cause, shall constitute an unfair termination or cancellation, regardless of the specified time period of such franchise or selling agreement. Except where the grounds for such termination or cancellation fall within division (iii) of subparagraph (B) of this paragraph, such manufacturer or factory branch or division, or officer, agent, or other representative thereof shall notify a wholesaler in writing of the termination or cancellation of the franchise or selling agreement of such wholesaler at least 60 days before the effective date thereof, stating the specific grounds for such termination or cancellation; and in no event shall the contractual term of any such franchise or selling agreement expire without the written consent of the wholesaler involved prior to the expiration of at least 60 days following such written notice. During the 60 day period, either party may, in appropriate circumstances, petition a court to modify such 60 day stay or to extend it pending a final determination of such proceedings on the merits. The court shall have authority to grant preliminary and final injunctive relief.
(B) As used in this paragraph, tests for determining what constitutes due cause for a manufacturer to terminate, cancel, or refuse to renew a franchise agreement shall include whether the wholesaler:
(i) Has transferred an ownership interest in the business without the manufacturer's consent;
(ii) Has made a material misrepresentation in applying for or acting under the franchise agreement;
(iii) Has filed a voluntary petition in bankruptcy or has had an involuntary petition in bankruptcy filed against the wholesaler which has not been discharged within 30 days after the filing, is in default under the provisions of a security agreement in effect with the manufacturer, or is in receivership;
(iv) Has engaged in an unfair business practice;
(v) Has inadequately represented the manufacturer's products with respect to sales, service, or warranty work;
(vi) Has engaged in conduct which is injurious or detrimental to the public welfare;
(vii) Has inadequate sales and service facilities and personnel;
(viii) Has failed to comply with an applicable licensing law;
(ix) Has been convicted of a crime, the effect of which would be detrimental to the manufacturer or wholesale business;
(x) Has failed to operate in the normal course of business for seven consecutive business days;
(xi) Has relocated the wholesaler's place of business without the manufacturer's consent; or
(xii) Has failed to comply with the terms of the franchise agreement;
(4) To resort to or use any false or misleading advertisement in connection with his business as such manufacturer, or factory branch or division, or officer, agent, or other representative thereof;
(5) To offer to sell any unit of farm equipment or implements or parts or accessories therefor to any other wholesaler at a lower actual price therefor than the actual price offered to any other wholesaler for farm equipment or implement identically equipped; or to utilize any device including, but not limited to, sales promotion plans or programs which result in such lesser actual price; provided, however, the provisions of this paragraph shall not apply to sales to a wholesaler for resale to any unit of the United States government, the state, or any of its political subdivisions; and provided, further, that the provisions of this paragraph shall not apply so long as a manufacturer sells or offers to sell such new farm equipment or implement, parts, or accessories to all their franchised wholesalers at an equal price;
(6) To discriminate willfully, either directly or indirectly, in price, programs, or terms of sale offered to franchisees, where the effect of such discrimination may be to lessen competition substantially or to give to one holder of a franchise any business or competitive advantage not offered to all holders of the same or similar franchise;
(7) To prevent or attempt to prevent, by contract or otherwise, any wholesaler from changing the capital structure of his business or the means by or through which he finances the operation of his business, provided the wholesaler at all times meets any reasonable capital standards agreed to between the wholesaler and the manufacturer and provided such change by the wholesaler does not result in a change in the executive management of the wholesaler;
(8) To prevent or attempt to prevent, by contract or otherwise, any wholesaler or any officer, partner, or stockholder of any wholesaler from selling or transferring any part of the interest of any of them to any other person or persons or party or parties; provided, however, that no wholesaler, officer, partner, or stockholder shall have the right to sell, transfer, or assign the franchise or power of management or control thereunder without the consent of the manufacturer, except that such consent shall not be unreasonably withheld;
(9) To obtain money, goods, services, anything of value, or any other benefit from any other person with whom the wholesaler does business or employs on account of or in relation to the transactions between the wholesaler, the franchisor, and such other person; or
(10) To require a wholesaler to assent to a release, assignment, notation, waiver, or estoppel which would relieve any person from liability imposed by this article.
(d) It shall be deemed a violation of Code Section 13-8-34 for a wholesaler:
(1) To require a purchaser of any unit of farm equipment or implement, as a condition of sale and delivery thereof, also to purchase special features, appliances, equipment, parts, or accessories not desired or requested by the purchaser; provided, however, that this prohibition shall not apply to special features, appliances, equipment, parts, or accessories which are already installed when a unit of farm equipment or implement is received by the wholesaler from the manufacturer thereof;
(2) To represent and sell as new and unused any unit of farm equipment or implement which has been used and operated for demonstration or other purposes without stating to the purchaser the approximate amount of use the unit of farm machinery or implement has experienced; or
(3) To resort to or use any false or misleading advertisement in connection with his business as such wholesaler.
(a) Every manufacturer shall specify and every wholesaler shall provide and fulfill reasonable predelivery and preparation obligations for its farm equipment or implements prior to delivery of same to purchasers.
(b) Every manufacturer shall provide for repair parts availability throughout the reasonable useful life of any farm equipment or implement sold.
(c) Every manufacturer shall provide to his wholesalers, on an annual basis, an opportunity to return a portion of his surplus parts inventory for credit. The surplus parts return procedure shall be administered as follows:
(1) The manufacturer may specify and thereupon notify his wholesalers of a time period of at least 60 days' duration, during which time wholesalers may submit their surplus parts list and return their surplus parts to the manufacturer;
(2) If a manufacturer has not notified a wholesaler of a specific time period for returning surplus parts within the preceding 12 months, then he shall authorize and allow the wholesaler's surplus parts return request within 30 days after receipt of such request from the wholesaler;
(3) Pursuant to the provisions of this subsection, a manufacturer must allow surplus parts return authority on a dollar value of parts equal to 10 percent of the total dollar value of purchases by the wholesaler from the manufacturer during the 12 month period immediately preceding the notification to the wholesaler by the manufacturer of the surplus parts return program, or the month the wholesaler's return request is made, whichever is applicable; provided, however, that the wholesaler may, at his option, elect to return a dollar value of his surplus parts less than 10 percent of the total dollar value of purchases by the wholesaler from the manufacturer during the preceding 12 month period as provided in this subsection;
(4) No obsolete or superseded part may be returned, but any part listed in the manufacturer's current parts price list at the date of notification to the wholesaler by the manufacturer of the surplus parts return program, or the date of a wholesaler's parts return request, whichever is applicable, shall be eligible for return and credit as specified in this subsection; provided, however, that returned parts must be in new and unused condition and must have been purchased from the manufacturer to whom they are returned;
(5) The minimum lawful credit to be allowed for returned parts shall be 85 percent of the wholesale cost thereof as listed in the manufacturer's current parts price list at the date of the notification to the wholesaler by the manufacturer of the surplus parts return program, or the date of a wholesaler's parts return request, whichever is applicable;
(6) Applicable credit pursuant to this subsection must be issued to the wholesaler within 30 days after receipt of his returned parts by the manufacturer; and
(7) Packing and return freight expense incurred in any return of surplus parts pursuant to the terms of this Code section shall be borne by the wholesaler.
Every manufacturer or factory branch or division shall reimburse its wholesalers for any expenses they incur in complying with the provisions of Georgia laws pertaining to warranty requirements for farm equipment or implements as they apply to products of the manufacturer.
The provisions of this article shall apply to all written or oral agreements between a manufacturer with a wholesaler including, but not limited to, the franchise offering, the franchise agreement, sales of goods, services and advertising, leases or mortgages of real or personal property, promises to pay, security interests, pledges, insurance contracts, advertising contracts, construction or installation contracts, servicing contracts, and all other such agreements in which the manufacturer has any direct or indirect interest.
It shall be unlawful for the manufacturer or franchisor, without due cause, to fail to renew on terms then equally available to all its wholesalers, to terminate a franchise, or to restrict the transfer of a franchise unless the franchisee shall receive fair and reasonable compensation for the inventory of the business. As used in this Code section, “due cause” shall be construed in accordance with the definition of same as contained in subparagraph (c)(3)(B) of Code Section 13-8-35.
(a) In addition to temporary or permanent injunctive relief as provided in subparagraph (c)(3)(A) of Code Section 13-8-35, any person who shall be injured in his business or property by reason of anything forbidden in this article may bring an action therefor in the appropriate superior court of this state and shall recover the actual damages sustained and the costs of such action, including a reasonable attorney's fee.
(b) When such action is one of common or general interest to many persons or when the parties are numerous and it is impracticable to bring them all before the court, one or more may bring a class action for the benefit of the whole, including actions for injunctive relief.
(c) In an action for money damages, if the jury finds that the defendant acted maliciously, the jury may award punitive damages as permitted by Georgia law.
Any contract or franchise agreement or part thereof or practice thereunder in violation of any provision of this article shall be deemed against public policy and shall be void and unenforceable.
(a) Whenever any wholesaler enters into a franchise agreement with a manufacturer wherein the wholesaler agrees to maintain an inventory of farm equipment or implements or repair parts and the franchise is subsequently terminated, the manufacturer shall repurchase the inventory as provided in this article. The wholesaler may keep the inventory if he desires. If the wholesaler has any outstanding debts to the manufacturer, then the repurchase amount may be credited to the wholesaler's account.
(b) The manufacturer shall repurchase that inventory previously purchased from him and held by the wholesaler on the date of termination of the contract. The manufacturer shall pay 100 percent of the actual wholesaler's cost, including freight, of all new, unsold, undamaged, and complete units of farm equipment or implements which are resalable, all demonstrator units of farm equipment or implements, and 100 percent of the current wholesale price of all new, unused, undamaged repair parts and accessories which are listed in the manufacturer's current parts price list. The manufacturer shall pay the wholesaler 5 percent of the current wholesale price on all new, unused, and undamaged repair parts returned to cover the cost of handling, packing, and loading.
(c) Upon payment within a reasonable time of the repurchase amount to the wholesaler, the title and right of possession to the repurchased inventory shall transfer to the manufacturer.
(d) The provisions of this article shall not require the repurchase from a wholesaler of:
(1) Any repair part which has a limited storage life or is otherwise subject to deterioration;
(2) Any single repair part which is priced as a set of two or more items;
(3) Any repair part which, because of its condition, is not resalable as a new part without repackaging or reconditioning;
(4) Any inventory for which the wholesaler is unable to furnish evidence, reasonably satisfactory to the manufacturer, of good title, free and clear of all claims, liens, and encumbrances;
(5) Any inventory which the wholesaler desires to keep, provided the wholesaler has a contractual right to do so;
(6) Any unit of farm equipment or implement which is not in new, unused, undamaged, complete condition, except units that have been used by the wholesaler as demonstrators;
(7) Any repair parts which are not in new, unused, undamaged condition;
(8) Any inventory which was ordered by the wholesaler on or after the date of receipt of the notification of termination of the franchise; or
(9) Any inventory which was acquired by the wholesaler from any source other than the manufacturer.
(e) If any manufacturer shall fail or refuse to repurchase any inventory covered under the provisions of this article within 60 days after termination of a wholesaler's contract, he shall be civilly liable for 100 percent of the current wholesale price of the inventory plus any freight charges paid by the wholesaler, the wholesaler's reasonable attorney's fees, court costs, and interest on the current wholesale price computed at the legal interest rate from the sixty-first day after termination.
In the event of the death or incapacity of the wholesaler or the majority stockholder of a corporation operating as a wholesaler, the manufacturer shall, at the option of the heirs at law if the wholesaler died intestate, or the devisees or transferees under the terms of the deceased wholesaler's last will and testament if said wholesaler died testate, repurchase the inventory from said heirs or devisees as aforesaid as if the manufacturer had terminated the contract, and the inventory repurchase provisions of Code Section 13-8-42 are made expressly applicable hereto. The heirs or devisees as aforesaid shall have one year from the date of the death of the wholesaler or majority stockholder to exercise their option under this article; provided, however, that nothing in this article shall require the repurchase of inventory if the heirs or devisees as aforesaid and the manufacturer enter into a new franchise agreement to operate the wholesale business.
A manufacturer will fully indemnify and hold harmless its wholesaler against any losses including, but not limited to, court costs and reasonable attorney's fees or damages arising out of complaints, claims, or lawsuits including, but not limited to, strict liability, negligence, misrepresentation, express or implied warranty, or rescission of the sale where the complaint, claim, or lawsuit relates to the manufacture, assembly, or design of new items covered by this article, parts or accessories, or other functions by the manufacturer which are beyond the control of the wholesaler.
The provisions of this article shall apply to all contracts now in effect which have no expiration date and are a continuing contract and all other contracts entered into or renewed after November 1, 1982. Any contract in force and effect on November 1, 1982, which by its own terms will terminate on a date subsequent thereto shall be governed by the law as it existed prior to this article.
The General Assembly finds that reasonable restrictive covenants contained in employment and commercial contracts serve the legitimate purpose of protecting legitimate business interests and creating an environment that is favorable to attracting commercial enterprises to Georgia and keeping existing businesses within the state. Further, the General Assembly desires to provide statutory guidance so that all parties to such agreements may be certain of the validity and enforceability of such provisions and may know their rights and duties according to such provisions.
As used in this article, the term:
(1) “Affiliate” means:
(A) A person or entity that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with another person or entity;
(B) Any entity of which a person is an officer, director, or partner or holds an equity interest or ownership position that accounts for 25 percent or more of the voting rights or profit interest of such entity;
(C) Any trust or other estate in which the person or entity has a beneficial interest of 25 percent or more or as to which such person or entity serves as trustee or in a similar fiduciary capacity; or
(D) The spouse, lineal ancestors, lineal descendants, and siblings of the person, as well as each of their spouses.
(2) “Business” means any line of trade or business conducted by the seller or employer, as such terms are defined in this Code section.
(3) “Confidential information” means data and information:
(A) Relating to the business of the employer, regardless of whether the data or information constitutes a trade secret as that term is defined in Code Section 10-1-761;
(B) Disclosed to the employee or of which the employee became aware of as a consequence of the employee's relationship with the employer;
(C) Having value to the employer;
(D) Not generally known to competitors of the employer; and
(E) Which includes trade secrets, methods of operation, names of customers, price lists, financial information and projections, route books, personnel data, and similar information;
provided, however, that such term shall not mean data or information (A) which has been voluntarily disclosed to the public by the employer, except where such public disclosure has been made by the employee without authorization from the employer; (B) which has been independently developed and disclosed by others; or (C) which has otherwise entered the public domain through lawful means.
(4) “Controlling interest” means any equity interest or ownership participation held by a person or entity with respect to a business that accounts for 25 percent or more of the voting rights or profit interest of the business prior to the sale, alone or in combination with the interest or participation held by affiliates of such person or entity.
(5) “Employee” means:
(A) An executive employee;
(B) Research and development personnel or other persons or entities of an employer, including, without limitation, independent contractors, in possession of confidential information that is important to the business of the employer;
(C) Any other person or entity, including an independent contractor, in possession of selective or specialized skills, learning, or abilities or customer contacts, customer information, or confidential information who or that has obtained such skills, learning, abilities, contacts, or information by reason of having worked for an employer; or
(D) A franchisee, distributor, lessee, licensee, or party to a partnership agreement or a sales agent, broker, or representative in connection with franchise, distributorship, lease, license, or partnership agreements.
Such term shall not include any employee who lacks selective or specialized skills, learning, or abilities or customer contacts, customer information, or confidential information.
(6) “Employer” means any corporation, partnership, proprietorship, or other business organization, whether for profit or not for profit, including, without limitation, any successor in interest to such an entity, who or that conducts business or any person or entity who or that directly or indirectly owns an equity interest or ownership participation in such an entity accounting for 25 percent or more of the voting rights or profit interest of such entity. Such term also means the buyer or seller of a business organization.
(7) “Executive employee” means a member of the board of directors, an officer, a key employee, a manager, or a supervisor of an employer.
(8) “Key employee” means an employee who, by reason of the employer's investment of time, training, money, trust, exposure to the public, or exposure to customers, vendors, or other business relationships during the course of the employee's employment with the employer, has gained a high level of notoriety, fame, reputation, or public persona as the employer's representative or spokesperson or has gained a high level of influence or credibility with the employer's customers, vendors, or other business relationships or is intimately involved in the planning for or direction of the business of the employer or a defined unit of the business of the employer. Such term also means an employee in possession of selective or specialized skills, learning, or abilities or customer contacts or customer information who has obtained such skills, learning, abilities, contacts, or information by reason of having worked for the employer.
(9) “Legitimate business interest” includes, but is not limited to:
(A) Trade secrets, as defined by Code Section 10-1-761;
(B) Valuable confidential information that otherwise does not qualify as a trade secret;
(C) Substantial relationships with specific prospective or existing customers, patients, vendors, or clients;
(D) Customer, patient, or client good will associated with:
(i) An ongoing business, commercial, or professional practice, including, but not limited to, by way of trade name, trademark, service mark, or trade dress;
(ii) A specific geographic location; or
(iii) A specific marketing or trade area; and
(E) Extraordinary or specialized training.
(10) “Material contact” means the contact between an employee and each customer or potential customer:
(A) With whom or which the employee dealt on behalf of the employer;
(B) Whose dealings with the employer were coordinated or supervised by the employee;
(C) About whom the employee obtained confidential information in the ordinary course of business as a result of such employee's association with the employer; or
(D) Who receives products or services authorized by the employer, the sale or provision of which results or resulted in compensation, commissions, or earnings for the employee within two years prior to the date of the employee's termination.
(11) “Modification” means the limitation of a restrictive covenant to render it reasonable in light of the circumstances in which it was made. Such term shall include:
(A) Severing or removing that part of a restrictive covenant that would otherwise make the entire restrictive covenant unenforceable; and
(B) Enforcing the provisions of a restrictive covenant to the extent that the provisions are reasonable.
(12) “Modify” means to make, to cause, or otherwise to bring about a modification.
(13) “Products or services” means anything of commercial value, including, without limitation, goods; personal, real, or intangible property; services; financial products; business opportunities or assistance; or any other object or aspect of business or the conduct thereof.
(14) “Professional” means an employee who has as a primary duty the performance of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction or requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor. Such term shall not include employees performing technician work using knowledge acquired through on-the-job and classroom training, rather than by acquiring the knowledge through prolonged academic study, such as might be performed, without limitation, by a mechanic, a manual laborer, or a ministerial employee.
(15) “Restrictive covenant” means an agreement between two or more parties that exists to protect the first party's or parties' interest in property, confidential information, customer good will, business relationships, employees, or any other economic advantages that the second party has obtained for the benefit of the first party or parties, to which the second party has gained access in the course of his or her relationship with the first party or parties, or which the first party or parties has acquired from the second party as the result of a sale. Such restrictive covenants may exist within or ancillary to contracts between or among employers and employees, distributors and manufacturers, lessors and lessees, partnerships and partners, employers and independent contractors, franchisors and franchisees, and sellers and purchasers of a business or commercial enterprise and any two or more employers. A restrictive covenant shall not include covenants appurtenant to real property.
(16) “Sale” means any sale or transfer of the good will or substantially all of the assets of a business or any sale or transfer of a controlling interest in a business, whether by sale, exchange, redemption, merger, or otherwise.
(17) “Seller” means any person or entity, including any successor-in-interest to such an entity, that is:
(A) An owner of a controlling interest;
(B) An executive employee of the business who receives, at a minimum, consideration in connection with a sale; or
(C) An affiliate of a person or entity described in subparagraph (A) of this paragraph; provided, however, that each sale involving a restrictive covenant shall be binding only on the person or entity entering into such covenant, its successors-in-interest, and, if so specified in the covenant, any entity that directly or indirectly through one or more affiliates is controlled by or is under common control of such person or entity.
(18) “Termination” means the termination of an employee's engagement with an employer, whether with or without cause, upon the initiative of either party.
(19) “Trade dress” means the distinctive packaging or design of a product that promotes the product and distinguishes it from other products in the marketplace.
(a) The provisions of this article shall be applicable only to contracts and agreements between or among:
(1) Employers and employees;
(2) Distributors and manufacturers;
(3) Lessors and lessees;
(4) Partnerships and partners;
(5) Franchisors and franchisees;
(6) Sellers and purchasers of a business or commercial enterprise; and
(7) Two or more employers.
(b) The provisions of this article shall not apply to any contract or agreement not described in subsection (a) of this Code section.
(a) Notwithstanding any other provision of this chapter, enforcement of contracts that restrict competition during the term of a restrictive covenant, so long as such restrictions are reasonable in time, geographic area, and scope of prohibited activities, shall be permitted. However, enforcement of contracts that restrict competition after the term of employment, as distinguished from a customer nonsolicitation provision, as described in subsection (b) of this Code section, or a nondisclosure of confidential information provision, as described in subsection (e) of this Code section, shall not be permitted against any employee who does not, in the course of his or her employment:
(1) Customarily and regularly solicit for the employer customers or prospective customers;
(2) Customarily and regularly engage in making sales or obtaining orders or contracts for products or services to be performed by others;
(3) Perform the following duties:
(A) Have a primary duty of managing the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof;
(B) Customarily and regularly direct the work of two or more other employees; and
(C) Have the authority to hire or fire other employees or have particular weight given to suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees; or
(4) Perform the duties of a key employee or of a professional.
(b) Notwithstanding any other provision of this chapter, an employee may agree in writing for the benefit of an employer to refrain, for a stated period of time following termination, from soliciting, or attempting to solicit, directly or by assisting others, any business from any of such employer's customers, including actively seeking prospective customers, with whom the employee had material contact during his or her employment for purposes of providing products or services that are competitive with those provided by the employer's business. No express reference to geographic area or the types of products or services considered to be competitive shall be required in order for the restraint to be enforceable. Any reference to a prohibition against “soliciting or attempting to solicit business from customers” or similar language shall be adequate for such purpose and narrowly construed to apply only to: (1) such of the employer's customers, including actively sought prospective customers, with whom the employee had material contact; and (2) products or services that are competitive with those provided by the employer's business.
(c)(1) Activities, products, or services that are competitive with the activities, products, or services of an employer shall include activities, products, or services that are the same as or similar to the activities, products, or services of the employer. Whenever a description of activities, products, or services, or geographic areas, is required by this Code section, any description that provides fair notice of the maximum reasonable scope of the restraint shall satisfy such requirement, even if the description is generalized or could possibly be stated more narrowly to exclude extraneous matters. In case of a post-employment covenant entered into prior to termination, any good faith estimate of the activities, products, or services, or geographic areas, that may be applicable at the time of termination shall also satisfy such requirement, even if such estimate is capable of including or ultimately proves to include extraneous activities, products, or services, or geographic areas. The post-employment covenant shall be construed ultimately to cover only so much of such estimate as relates to the activities actually conducted, the products or services actually offered, or the geographic areas actually involved within a reasonable period of time prior to termination.
(2) Activities, products, or services shall be considered sufficiently described if a reference to the activities, products, or services is provided and qualified by the phrase “of the type conducted, authorized, offered, or provided within two years prior to termination” or similar language containing the same or a lesser time period. The phrase “the territory where the employee is working at the time of termination” or similar language shall be considered sufficient as a description of geographic areas if the person or entity bound by the restraint can reasonably determine the maximum reasonable scope of the restraint at the time of termination.
(d) Any restrictive covenant not in compliance with the provisions of this article is unlawful and is void and unenforceable; provided, however, that a court may modify a covenant that is otherwise void and unenforceable so long as the modification does not render the covenant more restrictive with regard to the employee than as originally drafted by the parties.
(e) Nothing in this article shall be construed to limit the period of time for which a party may agree to maintain information as confidential or as a trade secret, or to limit the geographic area within which such information must be kept confidential or as a trade secret, for so long as the information or material remains confidential or a trade secret, as applicable.
(a) A court shall construe a restrictive covenant to comport with the reasonable intent and expectations of the parties to the covenant and in favor of providing reasonable protection to all legitimate business interests established by the person seeking enforcement.
(b) In any action concerning enforcement of a restrictive covenant, a court shall not enforce a restrictive covenant unless it is in compliance with the provisions of Code Section 13-8-53; provided, however, that if a court finds that a contractually specified restraint does not comply with the provisions of Code Section 13-8-53, then the court may modify the restraint provision and grant only the relief reasonably necessary to protect such interest or interests and to achieve the original intent of the contracting parties to the extent possible.
The person seeking enforcement of a restrictive covenant shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant. If a person seeking enforcement of the restrictive covenant establishes by prima-facie evidence that the restraint is in compliance with the provisions of Code Section 13-8-53, then any person opposing enforcement has the burden of establishing that the contractually specified restraint does not comply with such requirements or that such covenant is unreasonable.
In determining the reasonableness of a restrictive covenant that limits or restricts competition during or after the term of an employment or business relationship, the court shall make the following presumptions:
(1) During the term of the relationship, a time period equal to or measured by duration of the parties' business or commercial relationship is reasonable, provided that the reasonableness of a time period after a term of employment shall be as provided for in Code Section 13-8-57;
(2) A geographic territory which includes the areas in which the employer does business at any time during the parties' relationship, even if not known at the time of entry into the restrictive covenant, is reasonable, provided that:
(A) The total distance encompassed by the provisions of the covenant also is reasonable;
(B) The agreement contains a list of particular competitors as prohibited employers for a limited period of time after the term of employment or a business or commercial relationship; or
(C) Both subparagraphs (A) and (B) of this paragraph;
(3) The scope of competition restricted is measured by the business of the employer or other person or entity in whose favor the restrictive covenant is given; provided, however, that a court shall not refuse to enforce the provisions of a restrictive covenant because the person seeking enforcement establishes evidence that a restrictive covenant has been violated but has not proven that the covenant has been violated as to the entire scope of the prohibited activities of the person seeking enforcement or as to the entire geographic area of the covenant; and
(4) Any restriction that operates during the term of an employment relationship, agency relationship, independent contractor relationship, partnership, franchise, distributorship, license, ownership of a stake in a business entity, or other ongoing business relationship shall not be considered unreasonable because it lacks any specific limitation upon scope of activity, duration, or geographic area so long as it promotes or protects the purpose or subject matter of the agreement or relationship or deters any potential conflict of interest.
(a) In determining the reasonableness in time of a restrictive covenant sought to be enforced after a term of employment, a court shall apply the rebuttable presumptions provided in this Code section.
(b) In the case of a restrictive covenant sought to be enforced against a former employee and not associated with the sale or ownership of all or a material part of:
(1) The assets of a business, professional practice, or other commercial enterprise;
(2) The shares of a corporation;
(3) A partnership interest;
(4) A limited liability company membership; or
(5) An equity interest or profit participation, of any other type, in a business, professional practice, or other commercial enterprise,
a court shall presume to be reasonable in time any restraint two years or less in duration and shall presume to be unreasonable in time any restraint more than two years in duration, measured from the date of the termination of the business relationship.
(c) In the case of a restrictive covenant sought to be enforced against a current or former distributor, dealer, franchisee, lessee of real or personal property, or licensee of a trademark, trade dress, or service mark and not associated with the sale of all or a part of:
(1) The assets of a business, professional practice, or other commercial enterprise;
(2) The shares of a corporation;
(3) A partnership interest;
(4) A limited liability company membership; or
(5) An equity interest or profit participation, of any other type, in a business, professional practice, or other commercial enterprise,
a court shall presume to be reasonable in time any restraint three years or less in duration and shall presume to be unreasonable in time any restraint more than three years in duration, measured from the date of termination of the business relationship.
(d) In the case of a restrictive covenant sought to be enforced against the owner or seller of all or a material part of:
(1) The assets of a business, professional practice, or other commercial enterprise;
(2) The shares of a corporation;
(3) A partnership interest;
(4) A limited liability company membership; or
(5) An equity interest or profit participation, of any other type, in a business, professional practice, or other commercial enterprise,
a court shall presume to be reasonable in time any restraint the longer of five years or less in duration or equal to the period of time during which payments are being made to the owner or seller as a result of any sale referred to in this subsection and shall presume to be unreasonable in time any restraint more than the longer of five years in duration or the period of time during which payments are being made to the owner or seller as a result of any sale referred to in this subsection, measured from the date of termination or disposition of such interest.
(a) A court shall not refuse to enforce a restrictive covenant on the ground that the person seeking enforcement is a third-party beneficiary of such contract or is an assignee or successor to a party to such contract.
(b) In determining the enforceability of a restrictive covenant, it is not a defense that the person seeking enforcement no longer continues in business in the scope of the prohibited activities that is the subject of the action to enforce the restrictive covenant if such discontinuance of business is the result of a violation of the restriction.
(c) A court shall enforce a restrictive covenant by any appropriate and effective remedy available at law or equity, including, but not limited to, temporary and permanent injunctions.
(d) In determining the reasonableness of a restrictive covenant between an employer and an employee, as such term is defined in subparagraphs (A) through (C) of paragraph (5) of Code Section 13-8-51, a court may consider the economic hardship imposed upon an employee by enforcement of the covenant; provided, however, that this subsection shall not apply to contracts or agreements between or among those persons or entities listed in paragraphs (2) through (7) of subsection (a) of Code Section 13-8-52.
Nothing in this article shall be construed or interpreted to allow or to make enforceable any restraint of trade or commerce that is otherwise illegal or unenforceable under the laws of the United States or under the Constitution of this state or of the United States.
As used in this chapter, the term:
(1) “Contract for sale” means sales, purchases, agreements of sale, agreements to sell, and agreements to purchase; and
(2) “Person” means individuals, associations, partnerships, and corporations.
(a) All contracts of sale for future delivery of cotton, grain, stocks, or other commodities (1) made in accordance with the rules of any board of trade, exchange, or similar institution, (2) actually executed on the floor of such board of trade, exchange, or similar institution and performed or discharged according to the rules thereof, and (3) placed with or through a regular member in good standing of a cotton exchange, grain exchange, board of trade, or similar institution organized under the laws of this state or any other state shall be valid and enforceable in the courts according to their terms, provided that contracts of sale for future delivery of cotton, in order to be valid and enforceable as provided in this Code section, must not only conform to the requirements of clauses (1), (2), and (3) of this subsection, but must also be made subject to the United States Cotton Futures Act, approved August 11, 1916, and any amendments thereto; provided, further, that if this clause should for any reason be held inoperative, then contracts for future delivery of cotton shall be valid and enforceable if they conform to the requirements of clauses (1), (2), and (3) of this subsection.
(b) All contracts as defined in Code Section 13-9-1, where it is not contemplated by a party to the contract that there shall be an actual delivery of the commodities sold or bought, shall be unlawful.
(a) Any contract of sale for future delivery of cotton, grain, stocks, or other commodities shall be null and void and unenforceable in any court by any party thereto where it is not the bona fide intention of a party to the contract that the cotton, grain, stocks, or other commodities mentioned therein are to be delivered, but that the contract be settled according to or upon the basis of the public market quotations or prices made on any board of trade, exchange, or other similar institution, without any actual bona fide execution and the carrying out of such contract upon the floor of such exchange, board of trade, or similar institution, in accordance with the rules thereof.
(b) Any person, either as agent or principal, who enters into or assists in making a contract of sale for the future delivery of cotton, grain, stocks, or other commodities of the nature provided for in subsection (a) of this Code section shall be guilty of a felony and, upon conviction, shall be imprisoned for a period not exceeding two years.
Every person shall furnish upon demand, to any principal for whom such person has executed any contract for future delivery of any cotton, grain, stocks, or other commodities, a written instrument setting forth the name and location of the exchange, board of trade, or similar institution upon which such contract has been executed, the date of the execution of the contract, and the name and address of the person with whom such contract was executed; and if such person shall refuse or neglect to furnish such statement upon reasonable demand, such refusal or neglect shall be prima-facie evidence that such contract was an illegal contract within the provisions of Code Section 13-9-3 and that the person who executed it was engaged in the maintenance and operation of a bucket shop within the provisions of Code Section 13-9-6.
There may be organized in any municipality voluntary associations to be known as cotton exchanges, boards of trade, or similar institutions, to receive and post quotations on cotton, grain, stocks, or other commodities for the benefit of the members or other persons engaged in the production of cotton, grain, stocks, or other commodities. Such associations shall adopt a uniform set of rules and regulations not incompatible with the laws of this state and of the United States. Such associations shall open their books to inspection by all proper courts and officers when required to do so.
(a) As used in this Code section, the term “bucket shop” means any place of business in which contracts of the nature provided for in Code Section 13-9-3 are made.
(b) The maintenance or operation of a bucket shop is prohibited.
(c) Any person, either as agent or principal, who maintains or operates a bucket shop shall be guilty of a felony and, upon conviction, shall be imprisoned for a period not exceeding two years.
In the event of a conflict between this chapter and Title 11, the “Uniform Commercial Code,” the Uniform Commercial Code shall control.
As used in this article, the term “state” means the state of Georgia, any agency of the state, and any state authority.
(a)(1) Any bid bond, performance bond, payment bond, or security deposit required for a state public works construction contract shall be approved and filed with the treasurer or the person performing the duties usually performed by a treasurer of the obligee named in such bond. At the option of the state, if the surety named in the bond is other than a surety company authorized by law to do business in this state pursuant to a current certificate of authority to transact surety business by the Commissioner of Insurance, such bond shall not be approved and filed unless such surety is on the United States Department of Treasury's list of approved bond sureties.
(2) Any bid bond, performance bond, or payment bond required by this chapter shall be approved as to form and as to the solvency of the surety by an officer of the state or the agency or authority of the state negotiating the contract on behalf of the state. In the case of a bid bond, such approval shall be obtained prior to acceptance of the bid or proposal. In the case of a payment bond or a performance bond, such approval shall be obtained prior to the execution of the contract.
(b) Whenever, in the judgment of the obligee:
(1) Any surety on a bid, performance, or payment bond has become insolvent;
(2) Any corporate surety is no longer certified or approved by the Commissioner of Insurance to do business in the state; or
(3) For any cause there are no longer proper or sufficient sureties on any or all of the bonds,
the obligee may require the contractor to strengthen any or all of the bonds or to furnish a new or additional bond or bonds within ten days. Thereupon, if so ordered by the obligee, all work on the contract shall cease unless such new or additional bond or bonds are furnished. If such bond or bonds are not furnished within such time, the obligee may terminate the contract and complete the same as the agent of and at the expense of the contractor and his or her sureties.
(a) For the purpose of determining residency under this Code section, a Georgia resident business shall include any business that regularly maintains a place from which business is physically conducted in Georgia for at least one year prior to any bid or proposal submitted pursuant to this Code section or a new business that is domiciled in Georgia which regularly maintains a place from which business is physically conducted in Georgia; provided, however, that a place of business shall not include a post office box, site trailer, or temporary structure.
(b) Whenever the state contracts for the doing of a public work, materialmen, contractors, builders, architects, engineers, and laborers resident in the State of Georgia are to be granted the same preference over materialmen, contractors, builders, architects, engineers, and laborers resident in another state in the same manner, on the same basis, and to the same extent that preference is granted in awarding bids for the same goods or services by such other state to materialmen, contractors, builders, architects, engineers, and laborers resident in such other state over materialmen, contractors, builders, architects, engineers, and laborers resident in the State of Georgia. However, these requirements shall in no way impair the ability of the state to compare the quality of materials proposed for purchase and to compare the qualifications, character, responsibility, and fitness of materialmen, contractors, builders, architects, engineers, and laborers proposed for employment in its consideration of the purchase of materials or employment of persons. This subsection shall not apply to transportation projects for which federal aid funds are available.
(c) All state agencies, authorities, departments, commissions, boards, and similar entities shall adhere to the policies and procedures contained in the State Construction Manual for project management and procurement of, and contracting for, design, construction, and other project related professional services for all state owned buildings in Georgia funded by state bonds or other state revenue. The State Construction Manual shall be jointly edited and posted on a state website by the Georgia State Financing and Investment Commission and the Board of Regents of the University System of Georgia and shall be updated on a periodic basis to reflect evolving owner needs and industry best practices after consultation with other state agency and industry stakeholders.
(d)(1) To the extent permitted by law, no state agency, authority, department, commission, board, or similar entity that contracts for public works construction shall, in its bid documents, specifications, project agreements, or other controlling documents for a public works construction contract:
(A) Require or prohibit bidders, offerors, contractors, subcontractors, or material suppliers to enter into or adhere to prehire agreements, project labor agreements, collective bargaining agreements, or any other agreement with one or more labor organizations on the same or other related construction projects; or
(B) Discriminate against, or treat differently, bidders, offerors, contractors, subcontractors, or material suppliers for becoming or refusing to become or remain signatories or otherwise to adhere to agreements with one or more labor organizations on the same or other related construction projects.
(2) Nothing in this subsection shall prohibit bidders, offerors, contractors, subcontractors, or material suppliers from voluntarily entering into agreements described in paragraph (1) of this subsection.
(3) The head of a governmental entity may exempt a particular public works construction contract from the requirements of any or all of the provisions of paragraph (1) of this subsection if the governmental entity finds, after public notice and a hearing, that special circumstances require an exemption to avert an imminent threat to public health or safety. A finding of special circumstance under this paragraph shall not be based on the possibility or presence of a labor dispute concerning the use of contractors or subcontractors who are nonsignatories to, or otherwise do not adhere to, agreements with one or more labor organizations or concerning employees on the particular project who are not members of or affiliated with a labor organization.
In awarding contracts based upon sealed competitive bids or sealed competitive proposals, no bidder shall be disqualified from a bid or proposal or denied prequalification based upon:
(1) A lack of previous experience with a job of the size for which the bid or proposal is being sought if:
(A) The bid or proposal is not more than 30 percent greater in scope or cost from the bidder's previous experience in jobs;
(B) The bidder has experience in performing the work for which bids or proposals are sought; and
(C) The bidder is capable of being bonded by a surety which meets the qualifications of the bid documents for a bid bond, a performance bond, and a payment bond as required for the scope of the work for which the bid or proposal is being sought; or
(2) A lack of previous experience with the construction delivery method to be used for the job for which the bid or proposal is being sought.
(a) Bid bonds shall be required for all state public works construction contracts with estimated bids or proposals over $100,000.00; provided, however, that the state or any public board or body of the state may require a bid bond for projects with estimated bids or proposals of $100,000.00 or less.
(b) In the case of competitive sealed bids, except as provided in Code Sections 13-10-22 and 13-10-23, a bid may not be revoked or withdrawn until 60 days after the time set by the state or any public board or body of the state for opening of bids. Upon expiration of such 60 day time period, the bid will cease to be valid, unless the bidder provides written notice to the state prior to the scheduled expiration date that the bid will be extended for a time period specified by the state.
(c) In the case of competitive sealed proposals, the state shall advise offerors in the request for proposals of the number of days that offerors will be required to honor their proposals; provided, however, that if an offeror is not selected within 60 days of opening the proposals, any offeror that is determined by the state to be unlikely of being selected for contract award shall be released from his or her proposal.
(d) If the state requires a bid bond for any public works construction contract, no bid or proposal for a contract with the state shall be valid for any purpose unless the contractor gives a bid bond with good and sufficient surety or sureties approved by the state. The bid bond shall be in the amount of not less than 5 percent of the total amount payable by the terms of the contract. No bid or proposal shall be considered if a proper bid bond or other security authorized in Code Section 13-10-21 has not been submitted. The provisions of this subsection shall not apply to any bid or proposal for a contract that is required by law to be accompanied by a proposal guaranty and shall not apply to any bid or proposal for a contract with any public agency or body which receives funding from the United States Department of Transportation and which is primarily engaged in the business of public transportation.
(e) When the state invites competitive sealed proposals for a public works construction project and the request for proposals for such project states that price or project cost will not be a selection or evaluation factor, no bid bond shall be required unless the state provides for a bid bond in the request for proposals and specifies the amount of such bond.
(a) In lieu of the bid bond provided for in Code Section 13-10-20, the state may accept a cashier's check, certified check, or cash in the amount of not less than 5 percent of the total amount payable by the terms of the contract payable to and for the protection of the state.
(b) When the amount of any bid bond required under this article does not exceed $300,000.00, the state may, in its sole discretion, accept an irrevocable letter of credit issued by a bank or savings and loan association, as defined in Code Section 7-1-4, in the amount of and in lieu of the bond otherwise required under Code Section 13-10-20.
(a) As used in this Code section, the term “bid” shall include proposals and the term “bidder” shall include offerors.
(b) When receiving bids subject to this article, the state shall permit a bidder to withdraw a bid from consideration after the bid opening without forfeiture of the bid security if the bidder has made an appreciable error in the calculation of his or her bid and if:
(1) Such error in the calculation of his or her bid can be documented by clear and convincing written evidence;
(2) Such error can be clearly shown by objective evidence drawn from inspection of the original work papers, documents, or materials used in the preparation of the bid sought to be withdrawn;
(3) The bidder serves written notice upon the state or the agency or authority of the state which invited proposals for the work prior to the award of the contract and not later than 48 hours after the opening of bids, excluding Saturdays, Sundays, and legal holidays;
(4) The bid was submitted in good faith and the mistake was due to a calculation or clerical error, an inadvertent omission, or a typographical error as opposed to an error in judgment; and
(5) The withdrawal of the bid will not result in undue prejudice to the state or other bidders by placing them in a materially worse position than they would have occupied if the bid had never been submitted.
(c) In the event that an apparent successful bidder has withdrawn his or her bid as provided in subsection (b) of this Code section, action on the remaining bids should be considered as though the withdrawn bid had not been received. In the event the project is relet for bids, under no circumstances shall a bidder who has filed a request to withdraw a bid be permitted to resubmit a bid for the work.
(d) No bidder who is permitted to withdraw a bid pursuant to subsection (b) of this Code section shall for compensation supply any material or labor to, or perform any subcontract or other work agreement for, the person or firm to whom the contract is awarded or otherwise benefit, directly or indirectly, from the performance of the project for which the withdrawn bid was submitted.
(a) As used in this Code section, the term:
(1) “Affiliated corporation” means, with respect to any corporation, any other corporation related thereto:
(A) As a parent corporation;
(B) As a subsidiary corporation;
(C) As a sister corporation;
(D) By common ownership or control; or
(E) By control of one corporation by the other.
(2) The term “bid” shall include proposals.
(b) In any case where two or more affiliated corporations bid for a contract under this Code section and any one or more of such affiliated corporations subsequently rescind or revoke their bid or bids in favor of another such affiliated corporation whose bid is for a higher amount and the contract is awarded at such higher amount to such other affiliated corporation, then the bid bond, proposal guaranty, or other security otherwise required under this article of each affiliated corporation rescinding or revoking its bid shall be forfeited.
The obligee in any bid bond required to be given in accordance with this article shall be entitled to maintain an action thereon at any time upon any breach of such bond; provided, however, that no action may be instituted on the bonds or security deposits after one year from the completion of the contract and the acceptance of the public work by the state.
Except as otherwise provided in Title 32, performance bonds shall be required for all state public works construction contracts with an estimated contract amount greater than $100,000.00; provided, however, that the state may require a performance bond for public works construction contracts that are estimated at $100,000.00 or less. No public works construction contract requiring a performance bond shall be valid for any purpose unless the contractor gives such performance bond. The performance bond shall be in the amount of at least the total amount payable by the terms of the contract and shall be increased as the contract amount is increased.
When the amount of the performance bond required under this article does not exceed $300,000.00, the state may, in its sole discretion, accept an irrevocable letter of credit by a bank or savings and loan association, as defined in Code Section 7-1-4, in the amount of and in lieu of the bond otherwise required under this article.
The obligee in any performance bond required to be given in accordance with this article shall be entitled to maintain an action thereon at any time upon any breach of such bond; provided, however, no action can be instituted on the bonds or security deposits after one year from the completion of the contract and the acceptance of the public work by the state.
Public procurement officers shall accept electronic signatures and electronic corporate seals on bonds issued pursuant to this part so long as such signatures and seals comply with the provisions of Chapter 12 of Title 10 and Code Section 33-24-14.
Except as otherwise provided in Title 32, payment bonds shall be required for all state public works construction contracts with an estimated contract amount greater than $100,000.00; provided, however, that the state may require a payment bond for public works construction contracts that are estimated at $100,000.00 or less. No public works construction contract requiring a payment bond shall be valid for any purpose unless the contractor gives such payment bond; provided, however, that in lieu of such payment bond, the state, in its discretion, may accept a cashier's check, certified check, or cash for the use and protection of all subcontractors and all persons supplying labor, materials, machinery, and equipment in the prosecution of work provided in the contract. The payment bond or other security accepted in lieu of a payment bond shall be in the amount of at least the total amount payable by the terms of the initial contract and shall be increased if requested by the state as the contract amount is increased.
If a payment bond or security deposit is not taken in the manner and form required in this article, the corporation or body for which work is done under the contract shall be liable to all subcontractors and to all persons supplying labor, materials, machinery, or equipment to the contractor or subcontractor thereunder for any loss resulting to them from such failure. No agreement, modification, or change in the contract, change in the work covered by the contract, or extension of time for the completion of the contract shall release the sureties of such payment bond.
(a) The contractor furnishing the payment bond or security deposit shall post on the public works construction site and file with the clerk of the superior court in the county in which the site is located a notice of commencement no later than 15 days after the contractor physically commences work on the project and supply a copy of the notice of commencement to any subcontractor, materialman, or person who makes a written request of the contractor. Failure to supply a copy of the notice of commencement within ten calendar days of receipt of the written request from such subcontractor, materialman, or person shall render the provisions of paragraph (1) of subsection (a) of Code Section 13-10-63 inapplicable to such subcontractor, materialman, or person making the request. The notice of commencement shall include:
(1) The name, address, and telephone number of the contractor;
(2) The name and location of the public work being constructed or a general description of the improvement;
(3) The name and address of the state or the agency or authority of the state that is contracting for the public works construction;
(4) The name and address of the surety for the performance and payment bonds, if any; and
(5) The name and address of the holder of the security deposit provided, if any.
(b) The failure to file a notice of commencement shall render the notice to the contractor requirements of paragraph (2) of subsection (a) of Code Section 13-10-63 inapplicable.
(c) The clerk of the superior court shall file the notice of commencement within the records of that office and maintain an index separate from other real estate records or an index with the preliminary notices specified in subsection (a) of Code Section 44-14-361.3. Each such notice of commencement shall be indexed under the name of the state and the name of the contractor as contained in the notice of commencement.
(a) Every person entitled to the protection of the payment bond or security deposit required to be given who has not been paid in full for labor or materials furnished in the prosecution of the work referred to in such bond or security deposit before the expiration of a period of 90 days after the day on which the last of the labor was done or performed by such person or the material or equipment or machinery was furnished or supplied by such person for which such claim is made, or when he or she has completed his or her subcontract for which claim is made, shall have the right to bring an action on such payment bond or security deposit for the amount, or the balance thereof, unpaid at the time of the commencement of such action and to prosecute such action to final execution and judgment for the sum or sums due such person; provided, however, that:
(1) Any person having a direct contractual relationship with a subcontractor but no contractual relationship, express or implied, with the contractor furnishing such payment bond or security deposit on a public works construction project where the contractor has not complied with the notice of commencement requirements shall have the right of action upon the payment bond or security deposit upon giving written notice to the contractor within 90 days from the day on which such person did or performed the last of the labor or furnished the last of the material or machinery or equipment for which such claim is made, stating with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied or for whom the labor was performed or done. The notice to the contractor may be served by registered or certified mail or statutory overnight delivery, postage prepaid, duly addressed to the contractor, at any place at which the contractor maintains an office or conducts his or her business or at his or her residence, by depositing such notice in any post office or branch post office or any letter box under the control of the United States Postal Service; alternatively, notice may be served in any manner in which the sheriffs of this state are authorized by law to serve summons or process; and
(2) Any person having a direct contractual relationship with a subcontractor but no contractual relationship, express or implied, with the contractor furnishing such payment bond or security deposit on a public works construction project where the contractor has complied with the notice of commencement requirements in accordance with subsection (a) of Code Section 13-10-62 shall have the right of action on the payment bond or security deposit, provided that such person shall, within 30 days from the filing of the notice of commencement or 30 days following the first delivery of labor, material, machinery, or equipment, whichever is later, give to the contractor a written notice setting forth:
(A) The name, address, and telephone number of the person providing labor, material, machinery, or equipment;
(B) The name and address of each person at whose instance the labor, material, machinery, or equipment is being furnished;
(C) The name and the location of the public works construction site; and
(D) A description of the labor, material, machinery, or equipment being provided and, if known, the contract price or anticipated value of the labor, material, machinery, or equipment to be provided or the amount claimed to be due, if any.
(b) Nothing contained in this Code section shall limit the right of action of a person entitled to the protection of the payment bond or security deposit required to be given pursuant to this article to the 90 day period following the day on which such person did or performed the last of the labor or furnished the last of the material or machinery or equipment for which such claim is made.
(c) Every action instituted under this Code section shall be brought in the name of the claimant without making the state or the agency or authority of the state for which the work was done or was to be done a party to such action.
The official who has the custody of the bond or security deposit required by this article is authorized and directed to furnish to any person making application therefor a copy of the bond or security deposit agreement and the contract for which it was given, certified by the official who has custody of the bond or security deposit. With his or her application, such person shall also submit an affidavit that he or she has supplied labor or materials for such work and that payment therefor has not been made or that he or she is being sued on any such bond or security deposit. Such copy shall be primary evidence of the bond or security deposit and contract and shall be admitted in evidence without further proof. Applicants shall pay for such certified copies and such certified statements such fees as the official fixes to cover the cost of preparation thereof, provided that in no case shall the fee fixed exceed the fees which the clerks of the superior courts are permitted to charge for similar copies.
No action can be instituted on the payment bonds or security deposits after one year from the completion of the contract and the acceptance of the public works construction by the proper public authorities. Every action instituted under this article shall be brought in the name of the claimant, without the state or the agency or authority of the state for which the work was done or was to be done being made a party thereto.
Public procurement officers shall accept electronic signatures and electronic corporate seals on bonds issued pursuant to this part so long as such signatures and seals comply with the provisions of Chapter 12 of Title 10 and Code Section 33-24-14.
Public works construction contracts may include both liquidated damages provisions for late construction project completion and incentive provisions for early construction project completion when the project schedule is deemed to have value. The terms of the liquidated damages provisions and the incentive provisions shall be established in advance as a part of the construction contract and included within the terms of the bid or proposal.
(a) As used in this Code section, the term:
(1) “Contractor” means a person having a direct contract with the owner.
(2) “Lower tier subcontractor” means a person other than a contractor having a direct contract with a subcontractor.
(3) “Owner” means the state, any county, municipal corporation, authority, board of education, or other public board, public body, department, agency, instrumentality, or political subdivision of the state.
(4) “Owner's authorized contract representative” means the architect or engineer in charge of the project for the owner or such other contract representative or officer as designated in the contract documents as the party representing the owner's interest regarding administration and oversight of the project.
(5) “Subcontractor” means a person other than an owner having a direct contract with the contractor.
(b) In any public works construction contract entered into on or after July 1, 2022, with an owner, as defined in paragraph (3) of subsection (a) of this Code section, such contract shall provide for the following:
(1) After work has commenced at the construction site, progress payments to be made on some periodic basis, and at least monthly, based on the value of work completed as may be provided in the contract documents plus the value of materials and equipment suitably stored, insured, and protected at the construction site and at the owner's discretion such materials and equipment suitably stored, insured, and protected off site at a location approved by the owner's authorized contract representative when allowed by the contract documents, less retainage; and
(2)(A) Retainage to a maximum of 5 percent of each progress payment. At the discretion of the owner and with the approval of the contractor, the retainage of each subcontractor may be released separately as the subcontractor completes his or her work.
(B) At substantial completion of the work or such other standard of completion as may be provided in the contract documents and as the owner's authorized contract representative determines the work to be reasonably satisfactory, the owner shall, within 30 days after invoice and other appropriate documentation as may be required by the contract documents are provided, pay the retainage to the contractor. If at that time there are any remaining incomplete items, an amount equal to 200 percent of the value of each item as determined by the owner's authorized contract representative shall be withheld until such item or items are completed. The reduced retainage shall be shared by the contractor and subcontractors as their interests may appear.
(C) The contractor shall, within ten days from the contractor's receipt of retainage from the owner, pass through payments to subcontractors and shall reduce each subcontractor's retainage by the same percentage amount as the contractor's retainage is reduced by the owner; provided, however, that the work of the subcontractor is proceeding satisfactorily and the subcontractor has provided or provides such satisfactory reasonable assurances of continued performance and financial responsibility to complete his or her work, including any warranty work as the contractor in his or her reasonable discretion may require, including, but not limited to, a payment and performance bond.
(D) The subcontractor shall, within ten days from the subcontractor's receipt of retainage from the contractor, pass through payments to lower tier subcontractors and shall reduce each lower tier subcontractor's retainage in the same manner as the subcontractor's retainage is reduced by the contractor; provided, however, that the work of the lower tier subcontractor is proceeding satisfactorily and the lower tier subcontractor has provided or provides such satisfactory reasonable assurances of continued performance and financial responsibility to complete his or her work, including any warranty work as the subcontractor in his or her reasonable discretion may require, including, but not limited to, a payment and performance bond.
(c) This Code section shall not apply to:
(1) Any contracts let by the Department of Transportation of this state for the construction, improvement, or maintenance of roads or highways in this state or purposes incidental thereto; or
(2) Any contracts whose value or duration at the time of the award does not exceed $150,000.00 or 45 days in duration.
(d) Contract and subcontract provisions inconsistent with the benefits extended to contractors, subcontractors, and lower tier subcontractors by this Code section shall be unenforceable; provided, however, that nothing in this Code section shall render unenforceable any contract or subcontract provisions allowing greater benefits to be extended to such contractors, subcontractors, or lower tier subcontractors, the provisions and benefits of this Code section being minimal only.
(e) Nothing shall preclude a payor under this Code section, prior to making a payment, from requiring the payee to submit satisfactory evidence that all payrolls, material bills, and other indebtedness connected with the work have been paid.
(a) Any department, agency, or instrumentality of the state or any political subdivision of the state is authorized to insert in the specifications of all contracts relating to the installation, extension, improvement, maintenance, or repair of any water or sewer facility a clause providing for the retention of amounts not exceeding 5 percent of the gross value of the completed work as may be provided for in the contract. Retainage shall be invested at the current market rate and any interest earned on the retained amount by such department, agency, or instrumentality of the state or any political subdivision of the state shall be paid to the contractor when the project has been completed within the time limits specified and for the price specified in the contract, or in any amendments or change orders approved in accord with the terms of the contract, as certified pursuant to subsection (b) of this Code section.
(b) Final payment of the retained amounts to the contractor under the contract to which the retained amounts relate shall be made after certification by the engineer in charge of the project covered by the contract that the work has been satisfactorily completed and is accepted in accordance with the contract, plans, and specifications. Payment to the contractor of interest earned on the retained amounts shall be made after certification by the engineer in charge of the project covered by the contract that the work has been completed within the time specified and within the price specified in the contract.
(c) At substantial completion of the work and as the governmental entity's authorized contract representative determines the work to be reasonably satisfactory, the governmental entity shall, within 30 days after invoice and other appropriate documentation as may be required by the contract documents are provided, pay the retainage to the contractor. If at that time there are any remaining incomplete items, an amount equal to 200 percent of the value of each item as determined by the governmental entity's authorized contract representative shall be withheld until such item or items are completed.
(a) In lieu of the retained amounts provided for in Code Section 13-10-81, any department, agency, or instrumentality of the state or any political subdivision of the state is authorized to insert a clause in the specifications of all contracts provided for in Code Section 13-10-81, providing for an alternate procedure for the maintenance of an escrow account in an amount at least equal to the amount authorized to be retained by the contract.
(b) Any such escrow agreement entered into pursuant to this Code section must contain as a minimum the following provisions:
(1) Only state or national banks chartered within the State of Georgia may serve as an escrow agent;
(2) The escrow agent must limit the investment of funds of the contractor held in escrow in lieu of retained amounts provided for in Code Section 13-10-81 to negotiable certificates of deposits issued by any state or national bank in the State of Georgia (including, but not limited to, certificates of deposit issued by the bank acting as escrow agent) registered in the name of the escrow agent as such under escrow agreement with the contractor;
(3) As interest on certificates of deposit held in escrow becomes due, it shall be collected by the escrow agent and paid to the contractor;
(4) The escrow agent shall promptly acknowledge to the appropriate fiscal officer the amount and value of the escrow account held by the escrow agent, and any additions to the escrow account shall be reported immediately. Withdrawals from the escrow account shall only be made subject to the written approval of the fiscal officer of the department, agency, or instrumentality of the state or any political subdivision entering into the contract;
(5) Upon default or overpayment of any contract subject to the procedure provided for in this Code section and upon the written demand of the fiscal officer provided for in paragraph (4) of this subsection, the escrow agent shall within ten days deliver a certified check to the appropriate fiscal officer in the amount of the escrow account balance relating to the contract in default;
(6) The escrow account may be terminated upon completion and acceptance of the contract as provided for in Code Section 13-10-81;
(7) All fees and expenses of the escrow agent shall be paid by the contractor to the escrow agent and, if not paid, shall constitute a lien on the interest accruing to the escrow account and shall be paid therefrom;
(8) The escrow account shall constitute a specific pledge to the state or any political subdivision and the contractor shall not, except to his or her surety, otherwise assign, pledge, discount, sell, or transfer his or her interest in said escrow account, the funds of which shall not be subject to levy, garnishment, attachment, or any other process whatsoever; and
(9) The form of the escrow agreement and provisions thereof in compliance with this Code section, as well as such other provisions as the appropriate fiscal officer shall from time to time prescribe, shall be subject to written approval of the fiscal officer. The approval of the escrow agreement by the appropriate fiscal officer shall authorize the escrow agent to accept appointment in such capacity.
(c) The department, agency, or instrumentality of the state or political subdivision of this state shall not be liable to the contractor or his or her surety for the failure of the escrow agent to perform under the escrow agreement or for the failure of any bank to honor certificates of deposit issued by it which are held in the escrow account.
Nothing in this article shall be construed or deemed to affect any contract covered by the provisions of Code Sections 32-2-75 through 32-2-77.
As used in this article, the term:
(1) “Commissioner” means the Commissioner of Labor.
(2) “Contractor” means a person or entity that enters into a contract for the physical performance of services.
(3) “Federal work authorization program” means any of the electronic verification of work authorization programs operated by the United States Department of Homeland Security or any equivalent federal work authorization program operated by the United States Department of Homeland Security to verify employment eligibility information of newly hired employees, commonly known as E-Verify, or any subsequent replacement program.
(4) “Physical performance of services” means any performance of labor or services for a public employer using a bidding process or by contract wherein the labor or services exceed $2,499.99; provided, however, that such term shall not include any contract between a public employer and an individual who is licensed pursuant to Title 26 or Title 43 or by the State Bar of Georgia and is in good standing when such contract is for services to be rendered by such individual.
(5) “Public employer” means every department, agency, or instrumentality of this state or a political subdivision of this state.
(6) “Subcontractor” means a person or entity having privity of contract with a contractor, subcontractor, or sub-subcontractor and includes a contract employee or staffing agency.
(7) “Sub-subcontractor” means a person or entity having privity of contract with a subcontractor or privity of contract with another person or entity contracting with a subcontractor or sub-subcontractor.
(a) Every public employer, including, but not limited to, every municipality and county, shall register and participate in the federal work authorization program to verify employment eligibility of all newly hired employees. Upon federal authorization, a public employer shall permanently post the employer's federally issued user identification number and date of authorization, as established by the agreement for authorization, on the employer's website; provided, however, that if a local public employer does not maintain a website, then the local government shall submit such information to the Carl Vinson Institute of Government of the University of Georgia to be posted by the institute on the website created for local government audit and budget reporting. The Carl Vinson Institute of Government of the University of Georgia shall maintain the information submitted and provide instructions and submission guidelines for local governments. State departments, agencies, or instrumentalities may satisfy the requirement of this Code section by posting information required by this Code section on one website maintained and operated by the state.
(b)(1) A public employer shall not enter into a contract for the physical performance of services unless the contractor registers and participates in the federal work authorization program. Before a bid for any such service is considered by a public employer, the bid shall include a signed, notarized affidavit from the contractor attesting to the following:
(A) The affiant has registered with, is authorized to use, and uses the federal work authorization program;
(B) The user identification number and date of authorization for the affiant;
(C) The affiant will continue to use the federal work authorization program throughout the contract period; and
(D) The affiant will contract for the physical performance of services in satisfaction of such contract only with subcontractors who present an affidavit to the contractor with the same information required by subparagraphs (A), (B), and (C) of this paragraph.
An affidavit required by this subsection shall be considered an open public record once a public employer has entered into a contract for physical performance of services; provided, however, that any information protected from public disclosure by federal law or by Article 4 of Chapter 18 of Title 50 shall be redacted. Affidavits shall be maintained by the public employer for five years from the date of receipt.
(2) A contractor shall not enter into any contract with a public employer for the physical performance of services unless the contractor registers and participates in the federal work authorization program.
(3) A subcontractor shall not enter into any contract with a contractor unless such subcontractor registers and participates in the federal work authorization program. A subcontractor shall submit, at the time of such contract, an affidavit to the contractor in the same manner and with the same information required in paragraph (1) of this subsection. It shall be the duty of any subcontractor receiving an affidavit from a sub-subcontractor to forward notice to the contractor of the receipt, within five business days of receipt, of such affidavit. It shall be the duty of a subcontractor receiving notice of receipt of an affidavit from any sub-subcontractor that has contracted with a sub-subcontractor to forward, within five business days of receipt, a copy of such notice to the contractor.
(4) A sub-subcontractor shall not enter into any contract with a subcontractor or sub-subcontractor unless such sub-subcontractor registers and participates in the federal work authorization program. A sub-subcontractor shall submit, at the time of such contract, an affidavit to the subcontractor or sub-subcontractor with whom such sub-subcontractor has privity of contract, in the same manner and with the same information required in paragraph (1) of this subsection. It shall be the duty of any sub-subcontractor to forward notice of receipt of any affidavit from a sub-subcontractor to the subcontractor or sub-subcontractor with whom such receiving sub-subcontractor has privity of contract.
(5) In lieu of the affidavit required by this subsection, a contractor, subcontractor, or sub-subcontractor who has no employees and does not hire or intend to hire employees for purposes of satisfying or completing the terms and conditions of any part or all of the original contract with the public employer shall instead provide a copy of the state issued driver's license or state issued identification card of such contracting party and a copy of the state issued driver's license or identification card of each independent contractor utilized in the satisfaction of part or all of the original contract with a public employer. A driver's license or identification card shall only be accepted in lieu of an affidavit if it is issued by a state within the United States and such state verifies lawful immigration status prior to issuing a driver's license or identification card. For purposes of satisfying the requirements of this subsection, copies of such driver's license or identification card shall be forwarded to the public employer, contractor, subcontractor, or sub-subcontractor in the same manner as an affidavit and notice of receipt of an affidavit as required by paragraphs (1), (3), and (4) of this subsection. Not later than July 1, 2011, the Attorney General shall provide a list of the states that verify immigration status prior to the issuance of a driver's license or identification card and that only issue licenses or identification cards to persons lawfully present in the United States. The list of verified state drivers' licenses and identification cards shall be posted on the website of the State Law Department and updated annually thereafter. In the event that a contractor, subcontractor, or sub-subcontractor later determines that he or she will need to hire employees to satisfy or complete the physical performance of services under an applicable contract, then he or she shall first be required to comply with the affidavit requirements of this subsection.
(6) It shall be the duty of the contractor to submit copies of all affidavits, drivers' licenses, and identification cards required pursuant to this subsection to the public employer within five business days of receipt. No later than August 1, 2011, the Departments of Audits and Accounts shall create and post on its website form affidavits for the federal work authorization program. The affidavits shall require fields for the following information: the name of the project, the name of the contractor, subcontractor, or sub-subcontractor, the name of the public employer, and the employment eligibility information required pursuant to this subsection.
(7)(A) Public employers subject to the requirements of this subsection shall provide an annual report to the Department of Audits and Accounts pursuant to Code Section 50-36-4 as proof of compliance with this subsection. Subject to available funding, the state auditor shall conduct annual compliance audits on a minimum of at least one-half of the reporting agencies and publish the results of such audits annually on the Department of Audits and Accounts’ website on or before September 30.
(B) If the state auditor finds a political subdivision to be in violation of this subsection, such political subdivision shall be provided 30 days to demonstrate to the state auditor that such political subdivision has corrected all deficiencies and is in compliance with this subsection. If, after 30 days, the political subdivision has failed to correct all deficiencies, such political subdivision shall be excluded from the list of qualified local governments under Chapter 8 of Title 50 until such time as the political subdivision demonstrates to the state auditor that such political subdivision has corrected all deficiencies and is in compliance with this subsection.
(C)(i) At any time after the state auditor finds a political subdivision to be in violation of this subsection, such political subdivision may seek administrative relief through the Office of State Administrative Hearings. If a political subdivision seeks administrative relief, the time for correcting deficiencies shall be tolled, and any action to exclude the political subdivision from the list of qualified governments under Chapter 8 of Title 50 shall be suspended until such time as a final ruling upholding the findings of the state auditor is issued.
(ii) A new compliance report submitted to the state auditor by the political subdivision shall be deemed satisfactory and shall correct the prior deficient compliance report so long as the new report fully complies with this subsection.
(iii) No political subdivision of this state shall be found to be in violation of this subsection by the state auditor as a result of any actions of a county constitutional officer.
(D) If the state auditor finds any political subdivision which is a state department or agency to be in violation of the provisions of this subsection twice in a five-year period, the funds appropriated to such state department or agency for the fiscal year following the year in which the agency was found to be in violation for the second time shall be not greater than 90 percent of the amount so appropriated in the second year of such noncompliance. Any political subdivision found to be in violation of the provisions of this subsection shall be listed on www.open.georgia.gov or another official state website with an indication and explanation of each violation.
(8) Contingent upon appropriation or approval of necessary funding and in order to verify compliance with the provisions of this subsection, each year the Commissioner shall conduct no fewer than 100 random audits of public employers and contractors or may conduct such an audit upon reasonable grounds to suspect a violation of this subsection. The results of the audits shall be published on the www.open.georgia.gov website and on the Georgia Department of Labor's website no later than December 31 of each year. The Georgia Department of Labor shall seek funding from the United States Secretary of Labor to the extent such funding is available.
(9) Any person who knowingly and willfully makes a false, fictitious, or fraudulent statement in an affidavit submitted pursuant to this subsection shall be guilty of a violation of Code Section 16-10-20 and, upon conviction, shall be punished as provided in such Code section. Contractors, subcontractors, sub-subcontractors, and any person convicted for false statements based on a violation of this subsection shall be prohibited from bidding on or entering into any public contract for 12 months following such conviction. A contractor, subcontractor, or sub-subcontractor that has been found by the Commissioner to have violated this subsection shall be listed by the Department of Labor on www.open.georgia.gov or other official website of the state with public information regarding such violation, including the identity of the violator, the nature of the contract, and the date of conviction. A public employee, contractor, subcontractor, or sub-subcontractor shall not be held civilly liable or criminally responsible for unknowingly or unintentionally accepting a bid from or contracting with a contractor, subcontractor, or sub-subcontractor acting in violation of this subsection. Any contractor, subcontractor, or sub-subcontractor found by the Commissioner to have violated this subsection shall, on a second or subsequent violations, be prohibited from bidding on or entering into any public contract for 12 months following the date of such finding.
(10) There shall be a rebuttable presumption that a public employer, contractor, subcontractor, or sub-subcontractor receiving and acting upon an affidavit conforming to the content requirements of this subsection does so in good faith, and such public employer, contractor, subcontractor, or sub-subcontractor may rely upon such affidavit as being true and correct. The affidavit shall be admissible in any court of law for the purpose of establishing such presumption.
(11) Documents required by this Code section may be submitted electronically, provided the submission complies with Chapter 12 of Title 10.
(c) This Code section shall be enforced without regard to race, religion, gender, ethnicity, or national origin.
(d) Except as provided in subsection (e) of this Code section, the Commissioner shall prescribe forms and promulgate rules and regulations deemed necessary in order to administer and effectuate this Code section and publish such rules and regulations on the Georgia Department of Labor's website.
(e) The commissioner of the Georgia Department of Transportation shall prescribe all forms and promulgate rules and regulations deemed necessary for the application of this Code section to any contract or agreement relating to public transportation and shall publish such rules and regulations on the Georgia Department of Transportation's website.
(f) No employer or agency or political subdivision, as such term is defined in Code Section 50-36-1, shall be subject to lawsuit or liability arising from any act to comply with the requirements of this Code section.
This chapter shall be known and may be cited as the “Georgia Prompt Pay Act.”
As used in this chapter, the term:
(1) “Contractor” means a person who contracts with an owner to improve real property, to perform construction services, or to perform construction management services for an owner.
(2) “Improve” means to build, effect, alter, repair, or demolish any improvement upon, connected with, or on or beneath the surface of any real property or to excavate, clear, grade, fill, or landscape any real property or to construct driveways and private roadways or to furnish materials, including trees and shrubbery, for any of such purposes or to perform any labor upon such improvements.
(3) “Improvement” means all or any part of any building, structure, erection, alteration, demolition, excavation, clearing, grading, filling, or landscaping, including trees and shrubbery, driveways, and roadways, on real property.
(4) “Owner” means a person who has an interest in the real property improved and for whom an improvement is made and who ordered the improvement to be made. “Owner” includes private persons and entities and state, local, or municipal government agencies, instrumentalities, or entities; provided, however, that the provisions of this chapter shall not apply when the owner is a county having a population of less than 10,000 according to the United States decennial census of 1990 or any such future census or when the owner is a municipality having a population of less than 2,500 according to the United States decennial census of 1990 or any such future census.
(5) “Owner's representative” means the architect or engineer in charge of the project for the owner or such other contract representative or officer as designated in the contract documents as the party representing the owner's interest regarding administration and oversight of the project.
(6) “Real property” means the real estate that is improved, including lands, leaseholds, tenements, and improvements placed on the real property.
(7) “Receipt” means actual receipt of cash or funds in the contractor's or subcontractor's bank account.
(8) “Subcontractor” means any person who has contracted to furnish labor or materials to, or has performed labor or supplied materials for, a contractor or another subcontractor in connection with a contract to improve real property. For purposes of this chapter, the term “subcontractor” shall also include materialmen as defined in Code Section 44-14-360.
Performance by a contractor or subcontractor in accordance with the provisions of his or her contract and the satisfaction of the conditions of his or her contract precedent to payment entitles such person to payment from the party with whom he or she contracts.
(a) When a contractor has performed in accordance with the provisions of a contract, the owner shall pay the contractor within 15 days of receipt by the owner or the owner's representative of any payment request based upon work completed or service provided under the contract.
(b) When a subcontractor has performed in accordance with the provisions of its subcontract and the subcontract conditions precedent to payment have been satisfied, the contractor shall pay to that subcontractor and each subcontractor shall pay to its subcontractor, within ten days of receipt by the contractor or subcontractor of each periodic or final payment, the full amount received for such subcontractor's work and materials based on work completed or service provided under the subcontract, provided that the subcontractor has provided or provides such satisfactory reasonable assurances of continued performance and financial responsibility to complete his or her work as the contractor in his or her reasonable discretion may require, including but not limited to a payment and performance bond.
(a) Nothing in this chapter shall prevent the owner from withholding payment to its contractor because of the following: unsatisfactory job progress; defective construction which has not been remedied; disputed work; third-party claims filed or reasonable evidence that a claim will be filed; failure of the contractor or its subcontractor to make timely payments for labor, equipment, and materials; damage caused by the contractor to the owner, other contractors, or subcontractors; or reasonable evidence that the contract cannot be completed for the unpaid balance of the contract sum. In addition to the other bases for withholding set forth in this subsection, the owner may withhold a reasonable amount for retainage, provided that the retainage withheld by the owner shall not exceed the retainage percentage set forth in the contract between the contractor and the owner.
(b) Nothing in this chapter shall prevent the contractor or a subcontractor from withholding payment to a subcontractor for: unsatisfactory job progress; defective construction which has not been remedied; disputed work; third-party claims filed or reasonable evidence that a claim will be filed; failure of the subcontractor to make timely payments for labor, equipment, and materials; damage caused by the subcontractor to the owner, the contractor, or contractors or subcontractors; or reasonable evidence that the subcontract cannot be completed for the unpaid balance of the subcontract sum. In addition to the other bases for withholding set forth in this subsection, the contractor or the subcontractor, as the case may be, may withhold a reasonable amount for retainage, provided that the retainage withheld shall not exceed the percentage retained from the contractor by the owner on account of the subcontractor's work.
The contractor shall, within ten days from the contractor's receipt of retainage from the owner, pass through payments to subcontractors and shall reduce each subcontractor's retainage in the same manner as the contractor's retainage is reduced by the owner, provided that the value of the subcontractor's work complete and in place equals 50 percent of his or her subcontract value, including approved change orders and other additions to the subcontract value and, provided, further, that the work of the subcontractor is proceeding satisfactorily and, provided, further, that the subcontractor has provided or provides such satisfactory reasonable assurances of continued performance and financial responsibility to complete his or her work as the contractor in his or her reasonable discretion may require, including but not limited to a payment and performance bond.
(a) Except as provided in Code Section 13-11-5, if a periodic or final payment to a contractor is delayed by more than 15 days or if a periodic or final payment to a subcontractor is delayed more than ten days after receipt of periodic or final payment by the contractor or subcontractor, the owner, contractor, or subcontractor, as the case may be, shall pay his or her contractor or subcontractor interest, beginning on the day following the due date, at the rate of 1 percent per month or a pro rata fraction thereof on the unpaid balance as may be due. However, no interest is due unless the person being charged interest has been notified of the provision of this Code section at the time the request for payment is made. Acceptance of progress payments or final payment shall release all claims for interest on said payments.
(b) Nothing in this chapter shall prohibit owners, contractors, and subcontractors from agreeing by contract to rates of interest, payment periods, and contract and subcontract terms different from those stipulated in this Code section, and in this event, these contractual provisions shall control. In case of a willful breach of the contract provisions as to the time of payment, the interest rate specified in this Code section shall apply.
In any action to enforce a claim under this chapter, the prevailing party is entitled to recover a reasonable fee for the services of its attorney including but not limited to trial and appeal and arbitration, in an amount to be determined by the court or the arbitrators, as the case may be.
Neither the right to recover interest on a payment nor the right to recover attorneys' fees under this chapter are exclusive remedies. This chapter does not modify the remedies available to any person under the terms of a contract or by another statute.
The provisions of this chapter do not apply to improvements to real property intended for residential purposes which consist of 12 or fewer residential units.
The provisions of this chapter do not apply to contracts or subcontracts entered into prior to January 1, 1995.
As used in this chapter, the term:
(1) “Automatic renewal provision” means a provision under which a service contract is renewed for a specified period of more than one month if the renewal causes the service contract to be in effect more than six months after the day of the initiation of the service contract. Such renewal is effective unless the consumer gives notice to the seller of the consumer's intention to terminate the service contract.
(2) “Consumer” means a natural person or a nonprofit organization exempt from taxation under Section 501(c)(3) of the Internal Revenue Code of 1986 receiving service, maintenance, or repair benefits under a service contract. The term does not include a natural person engaged in business or employed by or otherwise acting on behalf of a governmental entity if the person enters into the service contract as part of or ancillary to the person's business activities or on behalf of the business or governmental entity.
(3) “Seller” means any person, firm, partnership, association, or corporation engaged in commerce that sells, leases, or offers to sell or lease any service to a consumer pursuant to a service contract.
(4) “Service contract” means a written contract for the performance of services for a specified period of time.
Any seller that sells, leases, or offers to sell or lease any service to a consumer pursuant to a service contract that has an automatic renewal provision shall disclose the automatic renewal provision clearly and conspicuously in the contract or contract offer.
(a) Any seller that sells, leases, or offers to sell or lease any service to a consumer pursuant to a service contract for a specified period of 12 months or more and that automatically renews for a specified period of more than one month, unless the consumer cancels the contract, shall provide the consumer with written or electronic notification of the automatic renewal provision. Notification shall be provided to the consumer no less than 30 days or no more than 60 days before the cancellation deadline pursuant to the automatic renewal provision. Such notification shall disclose clearly and conspicuously:
(1) That unless the consumer cancels the contract, the contract will automatically renew; and
(2) The methods by which the consumer may obtain details of the automatic renewal provision and cancellation procedure, including contacting the seller at a specified telephone number or address, referring to the contract, or any other method.
(b) For any contract for service to a consumer that automatically renews for a specified period of more than 24 months, the seller shall, in addition to providing the notification required under subsection (a) of this Code section, obtain the following for the automatic renewal provision of such contract to be enforceable:
(1) Written or electronic acknowledgment from the consumer of receipt of the notification required under subsection (a) of this Code section; and
(2) An affirmative written or electronic response that the consumer does not intend to terminate the service contract.
This chapter shall not apply to:
(1) A financial institution as provided in Chapter 1 or 2 of Title 7 or any depository institution as defined in 12 U.S.C. Section 1813(c)(2);
(2) A foreign bank maintaining a branch or agency licensed under the laws of any state of the United States;
(3) Any subsidiary or affiliate of an entity provided in paragraph (1) or (2) of this Code section;
(4) Any electric utility as provided in Chapter 3 of Title 46;
(5) Any entity regulated pursuant to Chapter 45 of Title 43; or
(6) Any county, municipal corporation, authority, or local government or governing body.
A violation of this chapter renders the automatic renewal provision of a contract void and unenforceable.
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