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Understanding Different Types Of Contracts in Georgia

Sometimes the different types of names for contracts can be confusing. Clients may be unclear as to what type of contract they have or what these words mean. Here is a brief explanation of the various kinds of contracts under Georgia law in simple plain English:

1. Executed Contract: This means that both parties to the contract have done what they are supposed to do. For example, if you pay me $2000 to deliver some cows, chickens, and horses to your farm and I do it, we have an “executed contract.” This means you did what you were supposed to do (pay me the money) and I did what I was supposed to do (deliver the farm animals.) There is nothing left to be done. O.C.G.A. § 13-1-2.

2. Executory Contract: Now let’s say that you paid me the $2000.00 and I delivered you the cows but I still had to deliver the chickens and horses. This is an executory contract which means that something still remains to be done by one of the parties to the contract. O.C.G.A. § 13-1-2.

3. Contract of Record: When a plaintiff (the person who claims injury over a contractual dispute) sues another (the defendant) in court over a contract and the Court renders judgment in favor of the plaintiff that court judgment becomes a contract of record. O.C.G.A. § 13-1-3. So for example, let’s say you hired me to represent you in a breach of contract dispute against Bob who was failing to deliver the chicken, horses, and cows you had paid him for. We sue Bob for breach of contract. The judge rules in your favor and awards you $10,000. That means that judgment becomes a “contract of record.”

4. Specialty Contract: This is just a fancy term for a “contract under seal” which is rarely done, but is considered a formal contract of “higher dignity” and is also subject to a longer statute of limitations. O.C.G.A. § 13-1-4.

5. Parol Contract: This is generally an oral contract and is just as legally enforceable as a written one. (Note there are limitations. Certain types of contracts always must be written.) O.C.G.A. § 13-1-6

6. Absolute or Conditional Contracts: A contract may be either absolute or conditional. Whenever you see words like “as long as” you know something is conditional. For example, a contract that says I will hold a pool party for you this Saturday in exchange for $1000.00 as long as it is sunny weather would be a conditional contract. The condition of course being the weather. If it rains on Saturday, there is no obligation to perform. O.C.G.A. § 13-1-7

7. Entire or Severable contracts: A contract can be “entire” which means the entire contract stands or falls together. This is not an ideal contract and is a good reason as to why it is so important to have an attorney draft your contract. For example, the lawyers at our firm draft contracts that are severable, meaning if it turns out that a certain portion of the contract ends up being ruled as void or illegal by a judge, the entire contract won’t get thrown out on its head. Rather, that portion (the invalid portion) will be “severed” from the contract and the remaining portion of the contract will still apply. O.C.G.A. § 13-1-8
Anytime it is necessary to enter into a contract with another party or enter into a business relationship, it is worth doing it right! The law can be very technical and you want to make sure that in the event of a future misunderstanding or dispute that the contract will be interpreted by a judge in a way that favors you. The only way to insure this is to seek legal counsel prior to entering into a contract.

The lawyers at Williams Oinonen LLC help our clients in all areas of business contracts, whether you need help drafting a solid contract for your business or whether you have a business contract dispute that requires litigation. Call us today for more information at 404-654-0288.