When You Do (and Don’t) Have the Required ‘Meeting of the Minds’ Needed to Make an Agreement Binding Under Georgia Law

When dealing with commercial contracts and negotiations regarding commercial contracts, there are pieces of information that can be crucial. Perhaps the most fundamental is “Do we or don’t we have a binding agreement enforceable under the law?” When it comes to negotiating an agreement and getting knowledgeable advice about the contractual legal obligations you do or don’t have, an experienced Atlanta commercial contracts lawyer can give you the answers you need.

One recent breach of contract case in federal court turned, in part, on this exact question of the existence (or non-existence) of a binding contract.

The defendant was a Georgia-based sports agent (and his agency) that, in 2016, contracted with a North Carolina-based financial and tax advisory firm. Upon the firm president’s advice, the agency hired C.H. as its chief operating officer. The COO and the financial advisors recommended that the agent seek a line of credit from a private lender, and he did so, agreeing to borrow $295,000. Of that sum, the agent alleged he received only $45,000.

Later, a subsequent promissory note purported to lend the agent an additional $650,000 from the same lender. The agent allegedly never received the $650,000 sum.

In 2020, another sports agency acquired the agent’s business. Sometime after that, the COO and the president of the advisory firm sent the agent a summary showing that his agency owed the lender more than $7 million.

Subsequently, the agent’s lawyer worked out a settlement of the debt. At this point, the agent allegedly learned — for the first time — that the advisory firm’s president, the agency’s COO, and the lender were all affiliated with one another.

Upon discovering that, the agent refused to sign any settlement documents. The lender and its affiliates sued, alleging that there was a binding settlement agreement in place and the agent breached the contract by refusing to sign the documents releasing them from civil liability. The agent fought back by launching counterclaims for “fraudulent inducement, fraud, negligent misrepresentation, breach of fiduciary duty, constructive fraud, and civil conspiracy.”

The Difference Between a Consensus and a Binding Contract

The trial court’s ruling on the plaintiffs’ motion to dismiss the counterclaims is useful in several regards; one being the moment when parties have a binding contract.

The plaintiffs argued that the settlement agreement barred the agent’s counterclaims. The agent contended that the settlement agreement was not a binding contract. The judge sided with the agent.

During the negotiations, the agent’s lawyer mailed a set of settlement terms, and the plaintiffs’ lawyer responded that the terms were agreeable. However, the agent’s lawyer later objected to the draft settlement agreement’s inclusion of a “confession of judgment.” The plaintiffs’ lawyer agreed to remove the term and sent the agent’s lawyer a revised draft, telling the agent’s lawyer to “circulate for signature if all is in order.” The agent’s lawyer replied by saying “I’ll turn this around.” That was the point when the agent allegedly discovered the affiliations and refused to sign.

What had transpired, according to the court, did “not demonstrate as a matter of law the meeting of the minds necessary to form a binding contract. At most, the parties reached consensus on the general outline of a settlement deal.”

The fact that the agent’s lawyer told the plaintiffs’ lawyer “I’ll turn this around” did not qualify as an acceptance of a contractual offer as a matter of law. This concept is well-rooted in Georgia law. In 2006, the state court of appeals ruled that an attorney telling opposing counsel “I’m going to get it signed and get it back to you” did not trigger the existence of a binding agreement.

Whether you’re litigating a contract dispute, negotiating a settlement of your contract dispute, or seeking to enforce an existing agreement that settled a contract dispute, the skilled Atlanta commercial contract attorneys at Poole Huffman, LLC can help. Our team has the effective techniques and strategies necessary to protect your rights and safeguard your business’s bottom line. Contact us online or by calling 404-373-4008 to schedule your confidential consultation today.