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Construction Law

GA Supreme Court: Routine Business Conduct Can Modify a Written Contract Despite 'No Modification' Clause

In Hanham v.Access Mgmt. Grp. L.P., 305 Ga. 414 (2019) the Georgia Supreme Court analyzed whether a written contract can be modified or changed solely through course of conduct absent a written modification. Ultimately finding that course of conduct alone can modify the terms of a written contract between private parties, the Supreme Court decision put paid to a series of recent Georgia Court of Appeals cases finding to the contrary.

In Hanham,subdivision residents sued their neighbor, her landscaper, and the subdivision’s property manager over certain landscaping changes the neighbor had completed. The Supreme Court decision centered around Plaintiffs’ breach of contract claim against the property manager. The written agreement of the property manager limited its responsibilities to the common areas in the subdivision. However, in practice, the manager’s duties had expanded to include applications for homeowners’ landscaping projects on their private property. Plaintiffs claimed that they were harmed by the approval of a landscaping project.

Reversing the Court of Appeals the Supreme Court set out in no uncertain terms that course of conduct can, in fact, modify a written agreement between private parties,noting that this rule applies even to contracts that require modifications to be in writing. 305 Ga. 414, FN.2. All that is required for an enforceable modification is mutual agreement and sufficient consideration.

Any contractor or owner who has ever had a case involving a contractor’s performance of extra work without a written change order will see the potential impact of the Hanham analysis. Whether or not an owner is required to pay for work performed often hinges on the very questions at the heart of this case. The Court’s decision reiterating the applicability of “course of conduct” modifications even to contracts requiring modifications to be in writing will no doubt provide much fertile ground for legal wrangling between contractor and owner.

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