Receiving a breach of contract demand letter, or being served with a lawsuit, is unsettling for any business owner. Your first response matters. What you do, or fail to do, in the first few weeks can significantly affect the outcome. This guide explains what Georgia law says about breach of contract claims and what you should do immediately.
What Is a Breach of Contract Under Georgia Law?
Under Georgia law, a breach of contract occurs when one party to a valid contract fails to perform their contractual obligation without a legally valid excuse. Georgia courts describe the elements of the claim as (1) a breach of a valid contract and (2) resulting damages (3) to the party who has the right to complain about the breach. A plaintiff who did not perform its own obligations may face a defense on that ground.
How Long Does the Other Party Have to Sue in Georgia?
Georgia's statute of limitations for written contracts is six years from the date of breach (O.C.G.A. § 9-3-24). For oral contracts, the limitation is four years (O.C.G.A. § 9-3-25). If the statute of limitations has expired, that is a complete defense to the lawsuit. This is one of the first things we analyze when evaluating a claim against a client.
What Damages Can Be Sought in a Georgia Breach of Contract Case?
The standard measure of damages in a Georgia breach of contract case puts the non-breaching party where it would have been if the contract had been performed. This typically includes direct damages (the value of the promised performance), consequential damages (foreseeable losses caused by the breach), and interest. Punitive damages are not available for breach of contract alone, though they may be available on a separate tort claim such as fraud.
What to Do Immediately When You Receive a Demand Letter or Lawsuit
Do not ignore it. A demand letter is not a lawsuit, but ignoring it typically results in a lawsuit being filed. If you do not answer a lawsuit within 30 days, you are in default. Liability is then established, and the plaintiff generally needs to prove only the amount of any unliquidated damages.
Do not destroy documents. Once you have any reason to anticipate litigation, Georgia courts require you to preserve relevant documents and electronic communications. Destroying evidence, even inadvertently, can lead to severe sanctions.
Do contact an attorney. The sooner you engage counsel, the more options you have. Early intervention often leads to faster, less expensive resolution.
What Defenses Are Available in a Georgia Breach of Contract Case?
Common defenses include: the contract was not valid (lack of consideration, fraudulent inducement, failure to meet Georgia's Statute of Frauds for contracts that must be in writing), the other party materially breached first (releasing you from your obligation), the damages claimed are not causally connected to the breach, or the contract was impossible or commercially impracticable to perform.
Should You Settle or Fight a Georgia Contract Dispute?
The right answer depends on the strength of your legal position, the likely damages if you lose, the cost of litigation compared to settlement, and the defendant's ability to pay a judgment. Most well-advised parties in business disputes settle before trial, but the good settlements come after they understand their legal position and negotiate from strength rather than panic.
What If You Lose at Trial?
A judgment against you in a contract case can often be appealed, but the window is short. In most Georgia civil cases, a notice of appeal must be filed within 30 days after the final judgment is entered, or within 30 days after the court rules on a timely motion for new trial. Some smaller cases, including damages judgments of $10,000 or less, require a discretionary application to the appellate court instead. The Court of Appeals of Georgia reviews the trial record for legal error, so the objections and motions your lawyer makes during the case determine what can be raised later. Learn more about Georgia civil appeals, or talk with our breach of contract attorneys about your case.