Legal Question in Credit and Debt Law in Georgia

I am going to breach an electrical contract with a General Contractor. If my company has no assets and he tries to sue me what right s do I have ?


Asked on 5/18/16, 3:35 pm

1 Answer from Attorneys

What rights? You are the party in breach. You have responsibilities, not rights. First, read the contract. What does it say about a default? Who is a party to the contract? You as an individual? Your company? Is your company incorporated? Why are you breaching? Has the contractor done any work?

I am not sure why this is a credit/debt question. Depending on who is a party to the contract its either a business law question or a consumer law issue. In either case, you should either re-direct your question to an appropriate attorney or else pay an attorney to review the contract because it is impossible for any attorney to answer your question without knowing the relevant facts. Some of my questions are geared to eliciting the facts but this is not an exhaustive list. You need to figure out the answers and put them in your post or else tell them to an attorney.

Generally when you are the party in breach, the contractor can sue you for either the monies owed under the contract or for the value of the work done to date. Of course, you can defend if you have any grounds to prove that breach of the contract was justified by the actions of the contractor provided you gave him/her the chance to cure. If this is a building or improvement to land and work was performed, then the contractor can file a mechanics' lien against the property but usually has to follow up by bringing a lawsuit. I would have to research the mechanics' lien law in GA as I am not all that familiar with it - this is outside my area of practice. I thus do not want to advise you of the particulars of the lien law.

I am not sure what your company has to do with this unless the company was a party to the contract. If the company was liable, did you sign any personal guarantees? If so, both you and the company can be sued. What does the company do? You say it has no assets but what about bank accounts? Receipts from customers? If the company is liable and a judgment is entered, then the sheriff can try to collect but if the company truly owns nothing (no bank accounts or anything else and has no receipts) then it will be hard to collect. If only you are liable on the contract, then anything in the business name cannot be seized for your personal debt provided that the business is incorporated. Does the business pay you money or any benefits? If a judgment is entered just against you, a judgment creditor can get a charging order and if the business owes you any money then it will have to pay that money to the creditor. Of course, if you are personally liable, your wages can be garnished (if you also work for someone else) and your personal bank account can be levied and any assets owned free and clear seized.

Since you have not breached the agreement yet, I strongly suggest that you meet with an attorney, pay him/her to review the contract and advise you of the consequences if you breach. The better option than to breach would be to try to negotiate a resolution so that you do not have to worry about being sued or having a mechanic's lien placed on the property.

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Answered on 5/18/16, 9:51 pm


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