O.C.G.A. § 13-8-2 (2019)

Annotations

Cross references. - Contracts to defeat or lessen competition or to encourage monopoly, Ga. Const. 1983, Art. III, Sec. VI, Para. V. Book, periodical, or newspaper tie-in sales, § 10-1-330 et seq. Partial restraints of trade, § 13-8-2.1. Null and void nature of contracts between employer and employee whereby employer is exempted from liability to employee for negligence of employer or his other employees, as such

liability is fixed by law, § 34-7-22. Void nature of agreement by individual to waive, release, or commute rights to benefits or any other rights under laws pertaining to employment security, § 34-8-250. Restriction on power of common carriers to limit liability, § 46-9-2. Editor’s notes. - Ga. L. 1990, p. 1676, § 2, not codified by the General Assembly, provides: ‘‘This Act takes effect on July 1, 1990. As a statement of public policy, this Act shall have general applicability to the fullest extent permitted by law. This Act shall further apply to all remedies sought or granted after the effective date with respect to the subject matter of this Act.’’ Ga. L. 2007, p. 208, § 2, not codified by the General Assembly, provides: ‘‘This Act shall not be applied to impair any obligation of contract or agreement entered into prior to July 1, 2007, but this Act shall apply to any contract entered into, extended, or renewed on or after such date.’’ Law reviews. - For article, ‘‘The General Practitioner and Anti-trust Problems,’’ see 20 Ga. B.J. 47 (1957). For article surveying important general legal principles of municipal and county government purchasing and contracting in Georgia, see 16 Mercer L. Rev. 371 (1965). For article discussing effect of contracts against public policy, see 4 Ga. L. Rev. 469 (1970). For article discussing interpretation in Georgia of insurance policies containing evidentiary conditions, see 12 Ga. L. Rev. 783 (1978). For article surveying recent legislative and judicial developments in Georgia’s real property laws, see 31 Mercer L. Rev. 187 (1979). For article on enforceability of restrictive covenants in employment contracts, see 17 Ga. St. B.J. 110 (1981). For article surveying developments in Georgia contracts law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 67 (1981). For article surveying developments in Georgia local government law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 187 (1981). For article surveying developments in Georgia real property law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 219 (1981). For article, ‘‘Liabilities of the Former Officer or Director,’’ see 18 Ga. St. B.J. 150 (1982). For annual survey on contracts, see 36 Mercer L. Rev.

151 (1984). For article, ‘‘The Underbrush Grows Deeper: Restrictive Covenants in Employment Agreements in Georgia,’’ see 21 Ga. St. B.J. 28 (1984). For article, ‘‘The New Documentary Concerns Associated With Intelligent Buildings,’’ see 22 Ga. St. B.J. 16 (1985). For article, ‘‘Defending the Lawsuit: A First-Round Checklist,’’ see 22 Ga. St. B.J. 24 (1985). For annual survey of law of contracts, see 38 Mercer L. Rev. 107 (1986). For article, ‘‘Survey of Current Georgia Law Regarding Restrictive Covenants,’’ see 25 Ga. St. B.J. 188 (1989). For article, ‘‘Georgia Constitution May Restrict the 1990 Restrictive Covenant Law,’’ see 27 Ga. St. B.J. 82 (1990). For article, ‘‘Georgia’s New Restrictive Covenant Act,’’ see 42 Mercer L. Rev. 1 (1990). For annual survey on law of contracts, see 42 Mercer L. Rev. 125 (1990). For article, ‘‘Georgia’s Indemnity Minefield,’’ see 28 Ga. St. B.J. 142 (1992). For annual survey article on contract law, see 45 Mercer L. Rev. 109 (1993). For article, ‘‘Restrictions on Post-Employment Competition by an Executive Under Georgia Law,’’ see 54 Mercer L. Rev. 1133 (2003). For survey article on construction law for the period from June 1, 2002 through May 31, 2003, see 55 Mercer L. Rev. 85 (2003). For survey article on labor and employment law for the period from June 1, 2002 to May 31, 2003, see 55 Mercer L. Rev. 303 (2003). For annual survey of construction law, see 56 Mercer L. Rev. 109 (2004). For annual survey of labor and employment law, see 56 Mercer L. Rev. 291 (2004). For annual survey of labor and employment law, see 57 Mercer L. Rev. 251 (2005). For annual survey of labor and em-

ployment law, see 58 Mercer L. Rev. 211 (2006). For survey article on construction law, see 59 Mercer L. Rev. 55 (2007). For survey article on insurance law, see 59 Mercer L. Rev. 195 (2007). For survey article on labor and employment law, see 59 Mercer L. Rev. 233 (2007). For survey article on labor and employment law, see 60 Mercer L. Rev. 217 (2008). For annual survey on construction law, see 61 Mercer L. Rev. 65 (2009). For article, ‘‘Georgia Gets Competitive,’’ see 15 (No. 4) Ga. St. B.J. 13 (2009). For note discussing organized crime in Georgia with respect to the application of state gambling laws, and suggesting proposals for combatting organized crime, see 7 Ga. St. B.J. 124 (1970). For note discussing covenants not to compete in employment contracts as void when in general restraint of trade, see 10 Ga. St. B.J. 125 (1973). For note discussing exculpatory clauses in leases in light of Country Club Apts. v. Scott, No. 36346 (Ga. Sup. Ct., Oct. 1, 1980), see 32 Mercer L. Rev. 419 (1980). For note on 1990 amendment of this Code section, see 7 Ga. L. Rev. 244 (1990). For comment on Dixie Bearings, Inc. v. Walker, 219 Ga. 353, 133 S.E.2d 338 (1963), see 1 Ga. St. B.J. 220 (1964). For comment on Durham v. Stand-By Labor of Ga., Inc., 230 Ga. 558, 198 S.E.2d 145 (1973), appearing below, see 8 Ga. L. Rev. 526 (1974). For comment discussing indemnity and exculpatory agreements contained in real property leases, see 33 Emory L.J. 135 (1984). For comment, ‘‘The Application of Contract Law to Georgia Noncompete Agreements: Have We Been Overlooking Something Obvious?,’’ see 41 Mercer L. Rev. 723 (1990).

JUDICIAL DECISIONS Analysis General Consideration 1. What Contravenes Public Policy 2. Power of Courts Regarding Illegal Contracts 3. Severability of Contract Provisions Exculpatory Clauses Contracts Tending to Corrupt Legislature or Judiciary Contracts in Restraint of Trade, Generally 1. In General 2. Nondisclosure Covenants 3. Application 4. Territorial Limitation Partial Restraints of Trade Restrictive Covenants Ancillary to Employment Contracts

1. In General 2. Territorial Limitation 3. Time Limitation 4. Application Restrictive Covenants Ancillary to Sale of Business 1. In General 2. Territorial Limitation 3. Application Gambling and Wagering Contracts 1. In General 2. Application 3. Insurance Contracts Contracts of Maintenance or Champerty General Consideration Editor’s notes. - The pre-1990 cases cited in the annotations under this Code section were decided prior to enactment of § 13-8-2.1, relating to partial restraints of trade. Determination of prevailing party in landlord-tenant suit. - Because a landlord recovered approximately three-fourths of the total amount of the damages the landlord sought, as well as significant non-monetary relief, namely a writ of possession, and the tenant lost on the tenant’s counterclaim and recovered nothing, the trial court was entitled to conclude that the landlord was the prevailing party in the litigation. Realty Lenders, Inc. v. Levine, 286 Ga. App. 326, 649 S.E.2d 333 (2007). Cited in Western Union Tel. Co. v. American Union Tel. Co., 65 Ga. 160, 38 Am. R. 781 (1880); Reed v. Janes, 84 Ga. 380, 11 S.E. 401 (1890); Johnson v. Hilton, 96 Ga. 577, 23 S.E. 841 (1895); Sessions v. Payne & Tye, 113 Ga. 955, 39 S.E. 325 (1901); Parsons v. Ambos, 121 Ga. 98, 48 S.E. 696 (1904); McAuliffe v. Vaughan, 135 Ga. 852, 70 S.E. 322, 33 L.R.A. (n.s.) 255, 1912A Ann. Cas. 290 (1911); James v. Haven & Clement, 185 F. 692 (5th Cir. 1911); Gowen v. New Orleans Naval Stores Co., 157 Ga. 107, 120 S.E. 776 (1923); Hood v. Legg, 160 Ga. 620, 128 S.E. 891 (1925); De Loach v. W.D. Eyre & Co., 46 Ga. App. 155, 167 S.E. 123 (1932); Washington County v. Sheppard, 46 Ga. App. 240, 167 S.E. 339 (1933); Bradford v. Hammond, 179 Ga. 40, 175 S.E. 18 (1934); Hall v. Simmons, 50 Ga. App. 634, 179 S.E. 272 (1935); Vandhitch v. Alverson, 52 Ga. App. 308, 183 S.E. 105 (1935); Cary v. Neel, 54 Ga. App. 860, 189 S.E. 575 (1936);

Fidelity-Phenix Fire Ins. Co. v. Cortez Cigar Co., 92 F.2d 882 (5th Cir. 1937); Clark v. Baker, 186 Ga. 65, 196 S.E. 750 (1938); Aiken v. Armistead, 186 Ga. 368, 198 S.E. 237 (1938); Drummond v. McKinley, 65 Ga. App. 145, 15 S.E.2d 535 (1941); Columbus Wine Co. v. Sheffield, 83 Ga. App. 593, 64 S.E.2d 356 (1951); Iteld v. Karp, 85 Ga. App. 835, 70 S.E.2d 378 (1952); Peoples Loan & Fin. Corp. v. McBurnette, 100 Ga. App. 4, 110 S.E.2d 32 (1959); Collins v. Storer Broadcasting Co., 217 Ga. 41, 120 S.E.2d 764 (1961); Martell v. Atlanta Biltmore Hotel Corp., 114 Ga. App. 646, 152 S.E.2d 579 (1966); Taylor Publishing Co. v. Jones, 226 Ga. 832, 177 S.E.2d 655 (1970); Prosser v. Horis A. Ward, Inc., 123 Ga. App. 205, 180 S.E.2d 270 (1971); Ken Stanton Music, Inc. v. Board of Educ., 227 Ga. 393, 181 S.E.2d 67 (1971); Stone v. Reinhard, 124 Ga. App. 355, 183 S.E.2d 601 (1971); Robert & Co. Assocs. v. Pinkerton & Laws Co., 124 Ga. App. 309, 183 S.E.2d 628 (1971); Fidelity & Deposit Co. v. Gainesville Iron Works, Inc., 125 Ga. App. 829, 189 S.E.2d 130 (1972); Troup County Elec. Membership Corp. v. City of La-Grange, 229 Ga. 171, 190 S.E.2d 64 (1972); Troup County Elec. Membership Corp. v. Georgia Power Co., 229 Ga. 348, 191 S.E.2d 33 (1972); Atlanta Gas Light Co. v. Georgia Pub. Serv. Comm’n, 229 Ga. 659, 193 S.E.2d 835 (1972); Morris v. Jones, 128 Ga. App. 847, 198 S.E.2d 354 (1973); Garber v. American Mut. Fire Ins. Co., 131 Ga. App. 366, 206 S.E.2d 86 (1974); Southern Ry. v. Brunswick Pulp & Paper Co., 376 F. Supp. 96 (S.D. Ga. 1974); Delta Air Lines v. McDonnell Douglas Corp., 503 F.2d 239 (5th Cir. 1974); Camp Concrete Prods. v. Central of Ga. Ry., 134 Ga. App. 537, 215 S.E.2d 299 (1975); Southern Protective Prods. Co. v.

Leasing Int’l, Inc., 134 Ga. App. 945, 216 S.E.2d 725 (1975); Central of Ga. R.R. v. Schnadig Corp., 139 Ga. App. 193, 228 S.E.2d 165 (1976); C.V. Mosley Constr. Co. v. McCuin, 238 Ga. 503, 233 S.E.2d 763 (1977); Vaughn & Co. v. Saul, 143 Ga. App. 74, 237 S.E.2d 622 (1977); Hartline-Thomas, Inc. v. Arthur Pew Constr. Co., 151 Ga. App. 598, 260 S.E.2d 744 (1979); Frazer v. City of Albany, 245 Ga. 399, 265 S.E.2d 581 (1980); Dixie Groceries, Inc. v. Albany Bus. Machs., Inc., 156 Ga. App. 36, 274 S.E.2d 81 (1980); O.H. Carter Co. v. Buckner, 160 Ga. App. 627, 287 S.E.2d 636 (1981); Nordson Corp. v. Plasschaert, 674 F.2d 1371 (11th Cir. 1982); Merren v. Plaza Towers Ltd. Partnership, 161 Ga. App. 543, 287 S.E.2d 771 (1982); Stefan Jewelers, Inc. v. Electro-Protective Corp., 161 Ga. App. 385, 288 S.E.2d 667 (1982); Pope v. Kem Mfg. Corp., 249 Ga. 868, 295 S.E.2d 290 (1982); Mid-Georgia Bandage Co. v. National Equip. Rental, Ltd., 164 Ga. App. 68, 296 S.E.2d 391 (1982); Harnden v. Alpha-Atlanta Constr., Inc., 164 Ga. App. 685, 297 S.E.2d 368 (1982); Burgett v. Thamer Constr., Inc., 165 Ga. App. 404, 300 S.E.2d 211 (1983); Seaboard C.L.R.R. v. Maverick Materials, Inc., 167 Ga. App. 160, 305 S.E.2d 810 (1983); Shanco Int’l, Ltd. v. Digital Controls, Inc., 169 Ga. App. 184, 312 S.E.2d 150 (1983); Bicknell v. Richard M. Hearn Roofing & Remodeling, Inc., 171 Ga. App. 128, 318 S.E.2d 729 (1984); Boddy Enters., Inc. v. City of Atlanta, 171 Ga. App. 551, 320 S.E.2d 374 (1984); DOT v. Brooks, 254 Ga. 303, 328 S.E.2d 705 (1985); Crowe v. Columbus Temporary Servs., Inc., 256 Ga. 239, 347 S.E.2d 560 (1986); Terrace Shopping Ctr. Joint Venture v. Oxford Group, Inc., 192 Ga. App. 346, 384 S.E.2d 679 (1989); McAlpin v. Coweta Fayette Surgical Assocs., 217 Ga. App. 669, 458 S.E.2d 499 (1995); Phillips v. MacDougald, 219 Ga. App. 152, 464 S.E.2d 390 (1995); Glynn-Brunswick Mem. Hosp. Auth. v. Gibbons, 243 Ga. App. 341, 530 S.E.2d 736 (2000); Georgia Receivables, Inc. v. Kirk, 242 Ga. App. 801, 531 S.E.2d 393 (2000); Reliance Ins. Co. of Ill. v. Richfield Hospitality Servs., Inc., 92 F. Supp. 2d 1329 (N.D. Ga. 2000). 1. What Contravenes Public Policy Contracts obviously and directly tending to bring about results prohibited by law are

void. - Contracts that obviously and directly tend in a marked degree to bring about results that the law seeks to prevent cannot be made basis of a successful suit. Such contracts are against public policy. Orkin Exterminating Co. v. Dewberry, 204 Ga. 794, 51 S.E.2d 669 (1949), overruled on other grounds, Barry v. Stanco Communications Prods., Inc., 243 Ga. 68, 252 S.E.2d 491 (1979); Jones v. Faulkner, 101 Ga. App. 547, 114 S.E.2d 542 (1960). Contracts against policy of the law are void and unenforceable even absent fraud in their procurement. Glosser v. Powers, 209 Ga. 149, 71 S.E.2d 230 (1952). When contract can be said to be contrary to public policy. - Contract cannot be said to be contrary to public policy unless the General Assembly has declared it to be so, or unless consideration of the contract is contrary to good morals and contrary to law, or unless it is entered into for purpose of effecting an illegal or immoral agreement or doing something which is in violation of law. Porubiansky v. Emory Univ., 156 Ga. App. 602, 275 S.E.2d 163 (1980), aff ’d, 248 Ga. 391, 282 S.E.2d 903 (1981). Only authentic, admissible evidence of public policy of a state is the state’s constitution, laws, and judicial decisions. Porubiansky v. Emory Univ., 156 Ga. App. 602, 275 S.E.2d 163 (1980), aff ’d, 248 Ga. 391, 282 S.E.2d 903 (1981). State regulation did not contravene public policy. - State revenue department’s regulation concerning malt beverage distribution in Georgia did not conflict with the statute that prohibited contracts between private parties in restraint of trade because the regulation was a law authorized by statute, and was not a private contract. Ga. Oilmen’s Ass’n v. Ga. Dep’t of Revenue, 261 Ga. App. 393, 582 S.E.2d 549 (2003). If part of the consideration of a contract is illegal, the contract is void. Hanley v. Savannah Bank & Trust Co., 208 Ga. 585, 68 S.E.2d 581 (1952). Word illegal applies to contracts forbidden by public policy. Hanley v. Savannah Bank & Trust Co., 208 Ga. 585, 68 S.E.2d 581 (1952). Illegal consideration is promise, act, or forebearance contrary to law or public policy. - An illegal consideration consists of any act or forbearance, or a promise to act or

General Consideration (Cont’d) 1. What Contravenes Public Policy (Cont’d) forbear, which is contrary to law or public policy. Hanley v. Savannah Bank & Trust Co., 208 Ga. 585, 68 S.E.2d 581 (1952). Contractual condition contrary to the health, safety, or welfare of others. - When the performance of a contractual condition would be contrary to the health, safety, or welfare of others, the contract may be considered unenforceable. Tidwell Homes, Inc. v. Shedd Leasing Co., 191 Ga. App. 892, 383 S.E.2d 334 (1989). Limitation of liability clause in construction contract. - In a negligence and breach of contractual warranty suit brought by a developer against an engineering firm for damages caused by the firm on a project involving the construction of an apartment complex, the trial court erred by granting the firm partial summary judgment and enforcing an indemnity clause in the contract that limited the firm’s liability to the firm’s fee. The limitation of liability clause violated public policy under O.C.G.A. § 13-8-2(b) since the clause contained language that applied to ‘‘any and all claims’’ by third parties and shifted all liability above the fee for services to the developer, no matter the origin of the claim or who was at fault. Lanier at McEver, L.P. v. Planners & Eng’rs Collaborative, Inc., 284 Ga. 204, 663 S.E.2d 240 (2008). When employee agreed to a deduction from the employee’s paycheck to cover the cost of workers’ compensation insurance, the agreement would be contrary to law and to public policy, and would, therefore, be unenforceable. Morgan S., Inc. v. Lee, 190 Ga. App. 410, 379 S.E.2d 219 (1989). An attorney’s promise to secure an inmate’s release from prison regardless of the legality of the inmate’s conviction and sentence was not enforceable and could not serve as the basis for a fraud action. Hamm v. Auld, 192 Ga. App. 717, 386 S.E.2d 385, cert. denied, 192 Ga. App. 902, 386 S.E.2d 385 (1989). Mother’s agreement to surrender child for benefit under will contravenes public policy. - Agreement by mother to surrender possession of her infant child in order to receive a benefit for herself and her other children

under a will was void as being against public policy. Hanley v. Savannah Bank & Trust Co., 208 Ga. 585, 68 S.E.2d 581 (1952). Provision prohibiting borrower from incurring additional debt without lender’s consent while loan remains unpaid is valid. - Contract provision which prohibits the borrower from incurring additional debt for business operations without the consent of the lender while the loan is still unpaid is not an unreasonable restraint on trade because it protects the legitimate rights of the lender by promoting solvency of borrower. Interstate Sec. Police, Inc. v. Citizens & S. Emory Bank, 237 Ga. 37, 226 S.E.2d 583 (1976). One-third contingency fee attorney retainer agreement for a workers’ compensation case is not void and unenforceable as against public policy. Norris v. Kunes, 166 Ga. App. 686, 305 S.E.2d 426 (1983). An attorney’s express retainer agreement obtained through violations of Directory Rule 3-102, prohibiting dividing legal fees with a nonlawyer and Disciplinary Rule 4-102, Standards 13 and 26, disapproving rewards for referrals through fee-sharing agreements with nonlawyers, is itself void as against public policy and, thus, invalidated the attorney’s claim of lien against settlement proceeds. Brandon v. Newman, 243 Ga. App. 183, 532 S.E.2d 743 (2000). Contingency fee contract between county board and private auditing corporation by which the corporation contingently shared in a percentage of the tax collected, was void as against public policy. Sears, Roebuck & Co. v. Parsons, 260 Ga. 824, 401 S.E.2d 4 (1991). Joint stipulation and contingent settlement agreement upon which a trial court based a grant of summary judgment was against public policy and was void under O.C.G.A. § 13-8-2 because it sought to bind the Georgia Insurers Insolvency Pool (GIIP) to make certain payments when the GIIP was not a party to the action. Norman Enters. Interior Design, Inc. v. DeKalb County, 245 Ga. App. 538, 538 S.E.2d 130 (2000). Insurance exclusion clause. - An insurance policy clause which excluded payment to an injured person if such person has been paid damages by or on behalf of the liable party in an amount equal to or greater than the total reasonable and necessary medical expenses incurred by the injured person did

not fall within the types of contracts described as violating public policy in the statute. State Farm Auto. Ins. Co. v. Walker, 234 Ga. App. 101, 505 S.E.2d 828 (1998). Provision in a golf course lease between a Chapter 11 debtor and a city that allowed authorized representatives of the city to use rounds at the golf course at no charge to entertain sponsors and clients and for promotional and other business purposes did not violate public policy under O.C.G.A. § 13-8-2(a) because it did not require a violation of any statute, and any unauthorized or inappropriate request by the city did not have to be honored. In re Cherokee Run Country Club, Inc. v. City of Conyers (In re Cherokee Run Country Club, Inc.), No. 08-84120-JB, 2009 Bankr. LEXIS 3700 (Bankr. N.D. Ga. Nov. 3, 2009). Waiver clauses in leases which were explicitly labeled as ‘‘Waiver of Subrogation’’ clauses and which by their terms did not apply in the absence of insurance were not indemnification clauses void under O.C.G.A. § 13-8-2 and were enforceable. Glazer v. Crescent Wallcoverings, Inc., 215 Ga. App. 492, 451 S.E.2d 509 (1994); Southern Trust Ins. Co. v. Center Developers, Inc., 217 Ga. App. 215, 456 S.E.2d 608 (1995), rev’d in part on other grounds, 266 Ga. 806, 471 S.E.2d 194 (1996); May Dep’t Store v. Center Developers, Inc., 266 Ga. 806, 471 S.E.2d 194 (1996). Corporation had a right to contractual indemnity from a general contractor after the corporation paid for subcontractor’s employees’ injuries because the parties’ contract provided coverage of the contractor’s indemnity obligation would be through insurance. O.C.G.A. § 13-8-2(b) did not void the indemnification provision of their contract since it required the contractor to procure liability insurance for its own benefit. The indemnification provision was not made void by O.C.G.A. § 13-8-2(b) because the indemnity provision together with the clause requiring insurance coverage showed the parties intended coverage by insurance. ESI, Inc. of Tenn. v. Westpoint Stevens, Inc., 254 Ga. App. 332, 562 S.E.2d 198 (2002). Since the provision in the lease between the corporation and landlord required the corporation to provide liability insurance to the landlord on the landlord’s store premises and merely shifted the risk of loss to

the insurer, that provision was not made void by O.C.G.A. § 13-8-2(b) which explained the sort of agreements that are void as against public policy. Great Atl. & Pac. Tea Co. v. F.S. Assocs., 257 Ga. App. 534, 571 S.E.2d 527 (2002). Liability limit clause issue waived on review. - Because a city did not seek to exclude, by pretrial motion or by timely trial objection, a liability limit provision of a contract between the city and an engineering firm, the city failed to properly except to the jury’s consideration of that clause, and so the city waived appellate review of the issue of whether that clause should have been presented for the jury’s consideration in a negligent misrepresentation case against the engineering firm. City of Cairo v. Hightower Consulting Eng’rs, Inc., 278 Ga. App. 721, 629 S.E.2d 518 (2006). 2. Power of Courts Regarding Illegal Contracts Any impairment of freedom to contract must have statutory basis. - Unless prohibited by statute or public policy, parties are free to contract on any terms and about any subject matter in which the parties have an interest, and any impairment of that right must be specifically expressed or necessarily implied by the legislature in a statutory prohibition and not left to speculation. Porubiansky v. Emory Univ., 156 Ga. App. 602, 275 S.E.2d 163 (1980), aff ’d, 248 Ga. 391, 282 S.E.2d 903 (1981). Courts should exercise power to void contracts only in cases free from doubt. - Power of courts to declare contracts void for contravening sound public policy is a very delicate and undefined power, and, like power to declare statutes unconstitutional, should be exercised only in cases free from doubt. Equitable Loan & Sec. Co. v. Waring, 117 Ga. 599, 44 S.E. 320, 97 Am. St. R. 177, 62 L.R.A. 93 (1903); McClelland v. Alexander, 117 Ga. App. 663, 161 S.E.2d 397 (1968), aff ’d, 248 Ga. 391, 282 S.E.2d 903 (1981); Porubiansky v. Emory Univ., 156 Ga. App. 602, 275 S.E.2d 163 (1980). Contracts in violation of statute requiring business license. - When a statute provides that a person proposing to engage in a certain business shall procure a license before being authorized to do so, and when it appears from the terms of the statute that it

General Consideration (Cont’d) 2. Power of Courts Regarding Illegal Contracts (Cont’d) was enacted not merely as a revenue measure but was intended as a regulation of such business in the interest of the public, contracts made in violation of such statute are void and unenforceable. Georgia Cent. Credit Union v. Weems, 157 Ga. App. 439, 278 S.E.2d 88 (1981). It is not to be presumed that people intend to violate the law, and the language of their undertakings must, if possible, be so construed as to make obligation one which the law will recognize as valid. Lie-Nielsen v. Tuxedo Plumbing & Heating Co., 149 Ga. App. 502, 254 S.E.2d 729 (1979), rev’d on other grounds, 245 Ga. 27, 262 S.E.2d 794 (1980). Contracts will not be avoided unless injury to public interest clearly appears. - Contracts will not be avoided by courts as against public policy unless case is free from doubt and injury to public interest clearly appears. Porubiansky v. Emory Univ., 156 Ga. App. 602, 275 S.E.2d 163 (1980), aff ’d, 248 Ga. 391, 282 S.E.2d 903 (1981). Provisions of the law should not be enlarged without convincing and conclusive reasons. Mutual Life Ins. Co. v. Durden, 9 Ga. App. 797, 72 S.E. 295 (1911); Porubiansky v. Emory Univ., 156 Ga. App. 602, 275 S.E.2d 163 (1980), aff ’d, 248 Ga. 391, 282 S.E.2d 903 (1981). Courts cannot involve themselves with enforcement of contracts which contravene public policy. - No court can properly concern itself with enforcement of a contract which is contrary to public policy, and for that reason void, nor with adjustment of alleged rights or equities growing out of such a contract. Gordon v. Gulf Am. Fire & Cas. Co., 113 Ga. App. 755, 149 S.E.2d 725 (1966). Comity as to laws of sister states is limited to laws not contravening public policy. - In enforcing comity in respect to laws of sister states, Georgia does so only so long as its enforcement is not contrary to policy of this state. Gulf Collateral, Inc. v. Morgan, 415 F. Supp. 319 (S.D. Ga. 1976). Courts of equity will not require specific performance of contract which contravenes public policy. Glosser v. Powers, 209 Ga. 149, 71 S.E.2d 230 (1952).

Invalidity of contract contravening public policy will be a defense while the contract remains unexecuted. Hanley v. Savannah Bank & Trust Co., 208 Ga. 585, 68 S.E.2d 581 (1952); Jones v. Faulkner, 101 Ga. App. 547, 114 S.E.2d 542 (1960). Executed illegal contract will be left to stand, but if executory, neither party can enforce the contract. Jones v. Faulkner, 101 Ga. App. 547, 114 S.E.2d 542 (1960). No action lies to recover money paid pursuant to illegal contract. - If illegal contract is in part performed, and money has been paid in pursuance of the contract, no action will lie to recover money paid. Hanley v. Savannah Bank & Trust Co., 208 Ga. 585, 68 S.E.2d 581 (1952); Jones v. Faulkner, 101 Ga. App. 547, 114 S.E.2d 542 (1960). No right to recover damages. - O.C.G.A. § 13-8-2 merely declares certain contracts unenforceable and does not confer any right to recover damages. E.T. Barwick Indus., Inc. v. Walter E. Heller & Co., 692 F. Supp. 1331 (N.D. Ga. 1987), aff ’d, 891 F.2d 906 (11th Cir. 1989). Contract which under common law is unenforceable cannot be enjoined by one not party to the contract. Palmer v. Atlantic Ice & Coal Corp., 178 Ga. 405, 173 S.E. 424 (1934). Insurer cannot take advantage of the insurer’s own illegal contract to escape liability on legal one. Wilson v. Progressive Life Ins. Co., 61 Ga. App. 617, 7 S.E.2d 44 (1940). 3. Severability of Contract Provisions Invalid waiver, unconnected with purposes of contract, may be severed and remainder may be enforced. - Contract based on legal and binding consideration and containing an attempted waiver of a right which cannot be waived because contrary to public policy, which waiver is wholly unconnected with purposes of the contract, is severable, and the part which is illegal is nevertheless enforceable. Brenau College v. Mincey, 68 Ga. App. 137, 22 S.E.2d 322 (1942). Contract based on legal consideration which contains legal and illegal promises, valid as to former. - When agreement consists of single promise, based on single consideration, if either is illegal, the whole contract is void. But when agreement is founded on legal consideration containing a

promise to do several things or to refrain from doing several things, and only some of the promises are illegal, those promises which are not illegal will be held to be valid. Scott v. Hall, 56 Ga. App. 467, 192 S.E. 920 (1937). Trial court properly granted summary judgment to a payee under the terms of a settlement agreement to recover funds owed for a preexisting debt, despite the fact that a confidentiality provision contained therein was void for public policy reasons as the consideration supporting the payment provision was separate and apart from the confidentiality provision. Unami v. Roshan, 290 Ga. App. 317, 659 S.E.2d 724 (2008). Adhesive contract found enforceable. - Mere fact that a contract was adhesive did not, standing alone, render the contract unenforceable. Realty Lenders, Inc. v. Levine, 286 Ga. App. 326, 649 S.E.2d 333 (2007). Blue penciling theory. - Since Georgia courts have refused to adopt a ‘‘blue pencil’’ theory of contract severability, overly broad covenants may not be salvaged by excising - or ‘‘blue penciling’’ - their unenforceable provisions. If any part of a covenant is unenforceable, the entire covenant must fail. A.L. Williams & Assocs. v. Stelk, 960 F.2d 942 (11th Cir. 1992), vacated on other grounds, 984 F.2d 391 (11th Cir. 1993). Exculpatory Clauses Editor’s notes. - For cases regarding restriction on carriers’ ability to limit liability occasioned by their own negligence, see the Judicial Decisions under O.C.G.A. § 46-9-2. Purpose of subsection (b) of O.C.G.A. § 13-8-2 is to prevent a building contractor, subcontractor, or owner from contracting away liability for accidents caused solely by that person’s negligence, whether during the construction of the building or after the structure is completed and occupied. Smith v. Seaboard Coast Line R.R., 639 F.2d 1235 (5th Cir. 1981). O.C.G.A. § 13-8-2 creates two threshold conditions: that the exculpatory clause purports to protect the indemnitee against the consequences of sole negligence and that the agreement pertain to the maintenance or construction of a building. Smith v. Seaboard Coast Line R.R., 639 F.2d 1235 (5th Cir. 1981).

One may exempt oneself, by contract, from liability to another for injuries caused by negligence, and such agreement is not void for contravening public policy. Porubiansky v. Emory Univ., 156 Ga. App. 602, 275 S.E.2d 163 (1980), aff ’d, 248 Ga. 391, 282 S.E.2d 903 (1981). As a general rule, a party may contract away liability to the other party for the consequences of one’s own negligence without contravening public policy, provided the parties’ intention to this effect is expressed in clear and unequivocal terms, and except when such an agreement is prohibited by statute or where a public duty is owed. Smith v. Seaboard Coast Line R.R., 639 F.2d 1235 (5th Cir. 1981). An exculpatory clause shields a defendant from liability for the plaintiff ’s injury, even when the defendant’s negligence caused or contributed to the accident. Smith v. Seaboard Coast Line R.R., 639 F.2d 1235 (5th Cir. 1981). Absent questions of public policy parties may contract to waive numerous and substantial rights. Orkin Exterminating Co. v. Stevens, 130 Ga. App. 363, 203 S.E.2d 587 (1973). Clause shifting risk of loss to insurer regardless of fault does not contravene public policy. - Waiver of subrogation clause, which only shifts risk of loss to insurance company, regardless of fault of parties, and does not require either party to indemnify the other and holds one harmless from one’s own sole negligence, does not violate public policy. Tuxedo Plumbing & Heating Co. v. Lie-Nielsen, 245 Ga. 27, 262 S.E.2d 794 (1980). O.C.G.A. § 13-8-2 was inapplicable, where neither the insurance clause of a construction contract nor the contract’s ‘‘hold harmless clause’’ required of either contracting party that the one indemnify the other and hold one harmless from one’s own sole negligence; rather, the insurance clause shifted the risk of loss to the insurance company regardless of which party was at fault. McAbee Constr. Co. v. Georgia Kraft Co., 178 Ga. App. 496, 343 S.E.2d 513 (1986). Based on findings that the parties intended to shift the risk of loss under the contract to insurance and did not intend, under the indemnification agreement, for

Exculpatory Clauses (Cont’d) defendant to bear the risk of loss for any accidents occurring due to the sole negligence of plaintiff, subsection (b) of O.C.G.A. § 13-8-2 was not applicable. Federal Paper Bd. Co. v. Harbert-Yeargin, Inc., 53 F. Supp. 2d 1361 (N.D. Ga. 1999). Indemnity contracts not construed to indemnify against indemnitee’s negligence unless such intent is clear. - Contracts of express indemnity are construed strictly and, absent plain, clear, and unequivocal language, will not be interpreted to indemnify against acts attributable to indemnitee’s own negligence. Binswanger Glass Co. v. Beers Constr. Co., 141 Ga. App. 715, 234 S.E.2d 363 (1977). Common carrier cannot arbitrarily limit liability for damages arising from negligence of carrier’s agents. Such a contract is contrary to public policy and cannot be enforced. Southern Express Co. v. Hanaw, 134 Ga. 445, 67 S.E. 944, 137 Am. St. R. 227 (1910). Exculpatory clause in consent form, signed as condition of receiving treatment, is invalid. - Exculpatory clause in consent form signed by patient as condition of receiving treatment at dental school clinic is invalid as contrary to public policy. Porubiansky v. Emory Univ., 156 Ga. App. 602, 275 S.E.2d 163 (1980), aff ’d, 248 Ga. 391, 282 S.E.2d 903 (1981). Clause voided in home inspection agreement. - An arbitrator’s decision voiding a limitation of liability clause in a home inspection agreement on the basis of subsection (b) O.C.G.A. § 13-8-2 did not compel an inference that the arbitrator overstepped the arbitrator’s authority. Amerispec Franchise v. Cross, 215 Ga. App. 669, 452 S.E.2d 188 (1994). Home inspection agreements. - Subsection (b) of O.C.G.A. § 13-8-2 was inapplicable to a clause in a home inspection agreement limiting loss to the cost of inspection. Brainard v. McKinney, 220 Ga. App. 329, 469 S.E.2d 441 (1996). Subsection (b) is applicable to exculpatory clauses in lease contracts. Country Club Apts., Inc. v. Scott, 246 Ga. 443, 271 S.E.2d 841 (1980). Exculpatory and indemnity provision in commercial lease providing that ‘‘lessee

hereby releases lessor from any and all damages to both person and property and will hold the lessor harmless from such damages during the terms of this lease’’ was void as against public policy. Barnes v. Pearman, 163 Ga. App. 790, 294 S.E.2d 619 (1982), aff ’d, 250 Ga. 628, 301 S.E.2d 647 (1983). Leases are among those contracts that are included within the ambit of the public policy prohibition established by subsection (b) of O.C.G.A. § 13-8-2. Borg-Warner Ins. Fin. Corp. v. Executive Park Ventures, 198 Ga. App. 70, 400 S.E.2d 340 (1990). Lease provision, even if construed as a mutual waiver of liability for the consequences of the parties’ respective negligent acts or omissions, was unenforceable as a bar to the landlord’s action against the tenant alleging that one of the tenant’s employees or agents had negligently set a fire which damaged the leased premises. Borg-Warner Ins. Fin. Corp. v. Executive Park Ventures, 198 Ga. App. 70, 400 S.E.2d 340 (1990). Lease provision releasing the parties from liability for losses to the property of the other regardless of cause, absent a mandatory insurance provision, was void as against public policy and consequently unenforceable against warehouse landlord, rendering the landlord liable for the tenant’s fire-induced damages. Central Whse. & Dev. Corp. v. Nostalgia, Inc., 210 Ga. App. 15, 435 S.E.2d 230 (1993), overruled on other grounds, Glazer v. Crescent Wallcoverings, Inc., 215 Ga. App. 492, 451 S.E.2d 509 (1994). Subsection (b) applies to license by tenant granting exhibit space. - Public policy provisions of subsection (b) of O.C.G.A. § 13-8-2 apply to license agreements involving a tenant’s use of real estate, and a booth space contract between the tenant of an exhibition hall and an exhibitor at a trade show is a form of license or concession agreement. National Candy Wholesalers, Inc. v. Chipurnoi, Inc., 180 Ga. App. 664, 350 S.E.2d 303 (1986). Exculpatory clauses in residential lease would not relieve landlord of liability for wrongful death of tenant. See Cain v. Vontz, 703 F.2d 1279 (11th Cir. 1983). Exculpatory clause in license exculpating tenant-grantor as to all claims held void. - When a license or concession agreement dealing with the use of real estate between a

tenant and an exhibitor for booth space includes an attempt to exculpate the tenant from all claims, necessarily including those arising exclusively from the tenant’s own, sole negligence, there is no error in the action of the trial court finding the exculpatory clause to be in violation of public policy, void, and unenforceable. National Candy Wholesalers, Inc. v. Chipurnoi, Inc., 180 Ga. App. 664, 350 S.E.2d 303 (1986). Subsection (b) of this statute operates in futuro only. Seaboard Coast Line R.R. v. Freight Delivery Serv., Inc., 133 Ga. App. 92, 210 S.E.2d 42 (1974) (see O.C.G.A. § 13-8-2). No retroactive application. - Subsection (b) of this statute, enacted in 1970, was not intended to, and does not, apply to contractual rights accruing prior to the law’s enactment. Southern Ry. v. Insurance Co. of N. Am., 228 Ga. 23, 183 S.E.2d 912 (1971) (see O.C.G.A. § 13-8-2). There is no legislative intent apparent that subsection (b) of this statute be applied retroactively. Orkin Exterminating Co. v. Stevens, 130 Ga. App. 363, 203 S.E.2d 587 (1973) (see O.C.G.A. § 13-8-2). Exculpatory clause purporting to nullify landlord’s implied warranty concerning latent defect is unenforceable. - Landlord’s implied warranty concerning latent defects existing at inception of lease is sufficiently analogous to a contract for maintenance or repair that an exculpatory provision purporting to nullify the effect of such implied warranty is void and unenforceable under subsection (b) of this statute. Country Club Apts., Inc. v. Scott, 154 Ga. App. 217, 267 S.E.2d 811, aff ’d, 246 Ga. 443, 271 S.E.2d 841 (1980); Porubiansky v. Emory Univ., 156 Ga. App. 602, 275 S.E.2d 163 (1980), aff ’d, 248 Ga. 391, 282 S.E.2d 903 (1981) (see O.C.G.A. § 13-8-2). Exculpatory clauses strictly construed in building construction or maintenance contracts. - As a general rule, a party can protect oneself by contract from liability for the consequences of one’s own negligent acts. As to contracts relating to the construction or maintenance of buildings, however, O.C.G.A. § 13-8-2 changes this common-law rule and, thus, should be strictly construed. Smith v. Seaboard Coast Line R.R., 639 F.2d 1235 (5th Cir. 1981). No indemnification for sole negligence in construction contracts. - Contracts related

to the construction or maintenance of a building that purport to indemnify a party for that party’s sole negligence are prohibited. Watson v. Union Camp Corp., 861 F. Supp. 1086 (S.D. Ga. 1994); Federal Paper Bd. Co. v. Harbert-Yeargin, Inc., 53 F. Supp. 2d 1361 (N.D. Ga. 1999). Exculpatory clause in contract between contractor and subcontractor void. - An agreement which requires a building contractor to indemnify a subcontractor against ‘‘all loss, damage, claims, liability or expense arising therefrom irrespective of whether such were due to the possession, use, operation or condition of the elevators, appurtenances, or hatchways, or through failure to comply with any building laws or to any other cause’’ is in violation of the public policy of Georgia. Morgan v. Westinghouse Elec. Corp., 579 F. Supp. 867 (N.D. Ga. 1984), aff ’d, 752 F.2d 648 (11th Cir. 1985). Indemnity provision enforceable in contract between architect and developer. - Indemnity provision in a contract between a developer and an architect did not contravene O.C.G.A. § 13-8-2(b) as the provision specifically excluded the architect’s sole negligence from the indemnity obligation of the developer. Precision Planning, Inc. v. Richmark Cmtys., Inc., 298 Ga. App. 78, 679 S.E.2d 43 (2009). Indemnity clause in a maintenance and rental agreement between a maintenance service corporation and the owner of a unit in a resort area, whereby the owner agreed to indemnify and hold harmless the corporation ‘‘from and against all claims, suits, damages, costs, losses and expenses arising from injury to any person, persons or property occurring on or about the said premises and relating to the performance of this Agreement,’’ was clearly violative of O.C.G.A. § 13-8-2. Big Canoe Corp. v. Moore & Groover, Inc., 171 Ga. App. 654, 320 S.E.2d 564 (1984). ‘‘Building structures, appurtenances, or appliances.’’ - An indemnification provision contract for the performance of maintenance on two large paper machines would fall within the ambit of subsection (b) of O.C.G.A. § 13-8-2 since the machines would be construed as either ‘‘appurtenances’’ or ‘‘appliances.’’ Federal Paper Bd. Co. v. Harbert-Yeargin, Inc., 53 F. Supp. 2d 1361 (N.D. Ga. 1999).

Exculpatory Clauses (Cont’d) Validity of indemnity agreements where negligence not found. - Indemnification clause whereby contractor agreed to indemnify owner for attorney fees in defense of claims for personal injury ‘‘caused or claimed to have been caused by . . . the performance of or failure to perform any work provided hereunder by the contractor [or] his subcontractors’’ did not violate public policy provisions of subsection (b), as the paragraph simply agreed to hold the owner harmless for a claim for monetary or property loss arising out of the contractor’s performance of the contract and did not seek to protect the owner from the owner’s own negligence. Hartline-Thomas, Inc. v. Arthur Pew Constr. Co., 151 Ga. App. 598, 260 S.E.2d 744 (1979). Contractor could invoke against subcontractor indemnification agreement for reimbursement of attorney’s fees in defending personal injury action where verdict held contractor not negligent. Hartline-Thomas, Inc. v. Arthur Pew Constr. Co., 151 Ga. App. 598, 260 S.E.2d 744 (1979). Severability of valid and invalid indemnity provisions. - Valid indemnification clause holding owner harmless for claim or loss arising out of contractor’s performance was severable from clause holding owner harmless from claims or losses arising out of owner’s negligence and could be invoked where owner was not found negligent. Hartline-Thomas, Inc. v. Arthur Pew Constr. Co., 151 Ga. App. 598, 260 S.E.2d 744 (1979). Subsection (b) inapplicable. - In a suit against a burglary alarm company alleging that the equipment installed and maintained by the company failed to prevent a burglary at the purchaser’s premises, where the contract contains an exculpatory clause, subsection (b) of O.C.G.A. § 13-8-2 does not apply because the contract is not a contract for real property and there are no ‘‘damages arising out of bodily injury to persons or damage to property.’’ West Side Loan Office v. Electro-Protective Corp., 167 Ga. App. 520, 306 S.E.2d 686 (1983). Indemnity clause void and unenforceable. - Absent an insurance clause showing mutual intent for a subcontractor’s insurance to cover losses to the store and contractor, an

indemnity clause was statutorily void and unenforceable. Federated Dep’t Stores v. Superior Drywall & Acoustical, 264 Ga. App. 857, 592 S.E.2d 485 (2003). Contracts Tending to Corrupt Legislature or Judiciary Contract contravenes public policy when real consideration is buying of votes and political influence. Exchange Nat’l Bank v. Henderson, 139 Ga. 260, 77 S.E. 36, 51 L.R.A. (n.s.) 549 (1913). Public officer’s agreement to accept less than fees or salary allowed by law is void as contrary to public policy, and same is true of a promise to give public officer more than amount which law fixes as compensation for officer’s services. Owens v. Floyd County, 96 Ga. App. 25, 99 S.E.2d 560 (1957). Contracts in Restraint of Trade, Generally 1. In General Contract in general restraint of trade is void. Brewer & Co. v. Lamar, Rankin & Lamar, 69 Ga. 656, 47 Am. R. 766 (1882); Brown & Allen v. Jacobs’ Pharmacy Co., 115 Ga. 429, 41 S.E. 553, 90 Am. St. R. 126, 57 L.R.A. 547 (1902). Georgia law prohibits contracts or agreements tending to defeat or lessen competition or in general restraint of trade. Uni-Worth Enters., Inc. v. Wilson, 244 Ga. 636, 261 S.E.2d 572 (1979). Both constitutional and legislative provisions, prohibit contracts or agreements in general restraint of trade. Howard Schultz & Assocs. v. Broniec, 239 Ga. 181, 236 S.E.2d 265 (1977), affirmed in part and remanded in part, Jackson & Coker, Inc. v. Hart, 261 Ga. 371, 405 S.E.2d 253 (1991). Contracts tending to lessen competition are against public policy and are therefore void. McNease v. National Motor Club of Am., Inc., 238 Ga. 53, 231 S.E.2d 58 (1976). Georgia law provides that contracts which tend to lessen competition or which are in restraint of trade are against public policy and are void. Wedgewood Carpet Mills, Inc. v. Color-Set, Inc., 149 Ga. App. 417, 254 S.E.2d 421 (1979). Section does not impose absolute bar against every kind of restrictive agreement. Howard Schultz & Assocs. v. Broniec, 239 Ga.

181, 236 S.E.2d 265 (1977), affirmed in part and remanded in part, Jackson & Coker, Inc. v. Hart, 261 Ga. 371, 405 S.E.2d 253 (1991). The prohibition of contracts or agreements in general restraint of trade does not impose an absolute bar against every kind of restrictive agreement. Adcock v. Speir Ins. Agency, Inc., 158 Ga. App. 317, 279 S.E.2d 759 (1981). Court prefers unrestrictive interpretation of contract. - When a court is presented with a restrictive covenant that is susceptible of more than one reasonable interpretation, the preferred interpretation is the one that least restricts competition, thereby posing the least affront to the public policy of the State of Georgia. Atlanta Ctr. Ltd. v. Hilton Hotels Corp., 848 F.2d 146 (11th Cir. 1988). Restrictive covenant for subdivision. - A restrictive covenant barring ‘‘For Sale’’ signs in a subdivision was not an unenforceable restraint on trade; the cases citing such authority referred to restrictive covenants in the employment area, not to restrictive covenants on the use of real property, and it was well settled that a grantor of real property could restrict the use of the property by restrictive covenants. Godley Park Homeowners Ass’n v. Bowen, 286 Ga. App. 21, 649 S.E.2d 308 (2007). Public policy generally disfavors contracts which diminish competition. - Contractual restraints which tend to diminish competition and trade have to be considered against a background of public policy generally disfavoring contracts which have that effect. Farmer v. Airco, Inc., 231 Ga. 847, 204 S.E.2d 580 (1974). Public policy of this state in respect to contracts in restraint of trade is reflected in Ga. Const. 1976, Art. III, Sec. VIII, Para. VIII (see now Ga. Const. 1983, Art. III, Sec. VI, Para. V), declaring that agreements which may have effect, or are intended to have effect, of defeating or lessening competition, or of encouraging monopoly, are illegal and void. Watkins v. Avnet, Inc., 122 Ga. App. 474, 177 S.E.2d 582 (1970). An onerous contractual provision in restraint of one’s trade or profession is illegal and unenforceable. Austin v. Benefield, 140 Ga. App. 96, 230 S.E.2d 16 (1976). In order to have standing to bring claims under Ga. Const. 1983, Art. III, Sec. VI, Para. V(c) (uncompetitive contracts) or para-

graph (a)(2) of O.C.G.A. § 13-8-2, the plaintiff must be a party to the alleged illegal contract or agreement. Valley Prods. Co. v. Landmark, 877 F. Supp. 1087 (W.D. Tenn. 1994), aff ’d, 128 F.3d 398 (11th Cir. 1997). Who may attack corporate contract as ultra vires or in restraint of trade. - State, stockholders, and parties could attack corporate contract as being ultra vires or in restraint of trade; bondholders could not do so. Palmer v. Atlantic Ice & Coal Corp., 178 Ga. 405, 173 S.E. 424 (1934). Common law tort actions. - Georgia recognizes a common law tort action in favor of third parties who are injured by a conspiracy in restraint of trade. United States Anchor Mfg., Inc. v. Rule Indus., Inc., 7 F.3d 986 (11th Cir. 1993), cert. denied, 512 U.S. 1221, 114 S. Ct. 2710, 129 L. Ed. 2d 2837 (1994). 2. Nondisclosure Covenants Covenants not to disclose and utilize confidential business information are related to general covenants not to compete because of the similar employer interest in maintaining competitive advantage. Durham v. Stand-By Labor of Ga., Inc., 230 Ga. 558, 198 S.E.2d 145 (1973). Such specific nondisclosure covenants, unlike general noncompetition covenants, bear no relation to territorial limitations, and their reasonableness turns on factors of time and nature of business interest sought to be protected. Durham v. Stand-By Labor of Ga., Inc., 230 Ga. 558, 198 S.E.2d 145 (1973). Georgia courts will provide injunctive relief to protect against disclosure of trade secrets notwithstanding an unenforceable nondisclosure covenant; this protection is an ‘‘implied term’’ in an employment contract. Prudential Ins. Co. of Am. v. Baum, 629 F. Supp. 466 (N.D. Ga. 1986). Nondisclosure clause may be enforceable. - When a nondisclosure clause is reasonably related to protecting the interests of the owner of a computer software system against competitive use by a former employee of special knowledge the employee would have naturally obtained as a result of the employee’s employment, the clause may be enforceable. U3S Corp. of Am. v. Parker, 202 Ga. App. 374, 414 S.E.2d 513 (1991), cert. denied, 1992 Ga. LEXIS 310 (1992).

Contracts in Restraint of Trade, Generally (Cont’d) 3. Application Contract tending to lessen competition or restrain trade may be upheld if restraint is reasonable and contract is valid in other respects. Wedgewood Carpet Mills, Inc. v. Color-Set, Inc., 149 Ga. App. 417, 254 S.E.2d 421 (1979). Reasonableness of restraints in noncompetition covenant is a question of law for court determination. McNease v. National Motor Club of Am., Inc., 238 Ga. 53, 231 S.E.2d 58 (1976). Whether or not a restrictive covenant is void is for a court to determine. Foster v. Union Cent. Life Ins. Co., 103 Ga. App. 420, 119 S.E.2d 289 (1961), overruled on other grounds, Brown Stove Works, Inc. v. Kimsey, 119 Ga. App. 453, 167 S.E.2d 693 (1976). Whether restraints imposed by employment contract are reasonable is a question of law for determination by court. Orkin Exterminating Co. v. Dewberry, 204 Ga. 794, 51 S.E.2d 669 (1949), overruled on other grounds, Barry v. Stanco Communications Prods., Inc., 243 Ga. 68, 252 S.E.2d 491 (1979); Mike Bajalia, Inc. v. Pike, 226 Ga. 131, 172 S.E.2d 676 (1970); Preferred Risk Mut. Ins. Co. v. Jones, 233 Ga. 423, 211 S.E.2d 720 (1975); Orkin Exterminating Co. v. Pelfrey, 237 Ga. 284, 227 S.E.2d 251 (1976). What is reasonable in a restrictive covenant is a matter of law for a court to decide. Kutash v. Gluckman, 193 Ga. 805, 20 S.E.2d 128 (1942); Watkins v. Avnet, Inc., 122 Ga. App. 474, 177 S.E.2d 582 (1970). Whether restraint imposed by agreement is reasonable determined by court. - In every case, it is for the court to determine whether, under its particular facts and circumstances, a restraint imposed by agreement is reasonable. Bullock v. Johnson, 110 Ga. 486, 35 S.E. 703 (1900); Hood v. Legg, 160 Ga. 620, 128 S.E. 891 (1925). Enforceability of restrictive covenants generally. - Covenants in restraint of trade may be enforced if the covenant’s are reasonable as to time and place and are not overly broad in activities proscribed, taking into consideration interests of individuals and commercial concerns as well as public policy in promoting competition. A rule of

reason will be applied by courts in reviewing such contracts. Barrett-Walls, Inc. v. T.V. Venture, Inc., 242 Ga. 816, 251 S.E.2d 558 (1979). Considerations for court. - In determining whether or not a restraint of trade is reasonable, a court should consider whether it is such only as to afford a fair protection to interest of party in favor of whom it is given, and not so large as to interfere with interest of public. Whatever restraint is larger than necessary for protection of the party can be of no benefit to either; it can only be oppressive and if oppressive, it is in the eye of the law unreasonable. Whatever is injurious to interest of the public is void, on grounds of public policy. Rakestraw v. Lanier, 104 Ga. 188, 30 S.E. 735, 69 Am. St. R. 154 (1898); Shirk v. Loftis Bros. & Co., 148 Ga. 500, 97 S.E. 66 (1918). If considered with reference to situation, business and objects of parties, and in light of all surrounding circumstances with reference to which contract was made, a restraint contracted for appears to have been for a just and honest purpose, for protection of legitimate interests of party in whose favor it is imposed, reasonable as between them, and not specially injurious to the public, such restraint will be held valid. Scott v. Hall, 56 Ga. App. 467, 192 S.E. 920 (1937); Turner v. Robinson, 214 Ga. 729, 107 S.E.2d 648 (1959); Spalding v. Southeastern Personnel of Atlanta, Inc., 222 Ga. 339, 149 S.E.2d 794 (1966); Interstate Sec. Police, Inc. v. Citizens & S. Emory Bank, 237 Ga. 37, 226 S.E.2d 583 (1976). In determination of whether limitations in contract restraining trade are reasonable, a court will consider nature and extent of trade or business, situation of parties, and all other circumstances. To be valid, a covenant must be reasonably necessary to protect interest of party in whose favor it is imposed, and must not unduly prejudice interest of the public. The restrictions imposed upon promisor must not be larger than are necessary for protection of promisee. Orkin Exterminating Co. v. Dewberry, 204 Ga. 794, 51 S.E.2d 669 (1949), overruled on other grounds, Barry v. Stanco Communications Prods., Inc., 243 Ga. 68, 252 S.E.2d 491 (1979). No better test can be applied to question of whether restrictive covenant is reasonable

or not than by considering whether restraint is such only as to afford a fair protection to interest of party in favor of whom restraint is given, and not so large as to interfere with interest of public. Coffee Sys. v. Fox, 226 Ga. 593, 176 S.E.2d 71 (1970). Under the law of Georgia, covenants in restraint of trade may be enforced if the covenants are reasonable as to time and place and are not overly broad as to activities proscribed, taking into consideration interests of individuals in gaining and pursuing a livelihood, of commercial concerns in protecting property, confidential information and relationships, good will and economic advantage, and of broader public policy favoring individual freedom to enter into contracts and to contract as one will. Durham v. Stand-By Labor of Ga., Inc., 230 Ga. 558, 198 S.E.2d 145 (1973). Noncompetitive provisions in contracts will be enforced only if restraints are reasonable in time, reasonable and definite in territorial extent, and in nature of business activities proscribed. Barrett-Walls, Inc. v. T.V. Venture, Inc., 242 Ga. 816, 251 S.E.2d 558 (1979). Prerequisites before enforcement of noncompetition provisions. - Under the law of Georgia, there are three prerequisites which must be met before noncompetition provisions in contracts may be enforced without contravening public policy. These prerequisites are that the provision: (1) must be reasonable as to time of restraint; (2) must be definite and reasonable as to territorial extent of duty owed not to compete; and (3) must be definite and reasonable as to nature of business activities proscribed. Farmer v. Airco, Inc., 231 Ga. 847, 204 S.E.2d 580 (1974). True test of validity of contract in restraint of trade is whether contract is supported by sufficient consideration and whether restraint is reasonable. Stewart v. American Home Mut. Life Ins. Co., 107 Ga. App. 105, 129 S.E.2d 367 (1962). Any covenant not to compete is invalid if not limited as to time and space. Cheese Shop Int’l, Inc. v. Wirth, 304 F. Supp. 861 (N.D. Ga. 1969), but see O.C.G.A. § 13-8-2.1. Distinction between property and professional interest. - See Rakestraw v. Lanier, 104 Ga. 188, 30 S.E. 735, 69 Am. St. R. 154 (1898).

Distinction between restraints on practice of profession and restraints connected with sale of business. - A distinction exists between that class of contracts binding one to desist from practice of a learned profession, and those which bind one who has sold out a mercantile or other kind of business, and the good will therewith connected, not to again engage in that business. In the former class there should be a reasonable limit as to time, so as to prevent contract from operating with unnecessary harshness against person who is to abstain from practicing one’s profession at a time when one so doing could in no way benefit the other contracting party. In the latter class such limit is not essential to validity of the contract, but the restraint may be indefinite. Kutash v. Gluckman, 193 Ga. 805, 20 S.E.2d 128 (1942); Burdine v. Brooks, 206 Ga. 12, 55 S.E.2d 605 (1949). Principle applying to learned professions has been extended to occupations which require special skill. Kutash v. Gluckman, 193 Ga. 805, 20 S.E.2d 128 (1942). Unenforceability due to no time limitation. - When a nondisclosure clause contained no time limitation, the clause was unenforceable. U3S Corp. of Am. v. Parker, 202 Ga. App. 374, 414 S.E.2d 513 (1991). Contract restraining trade upheld when based upon consideration making it reasonable for parties to do so. - Contract in restraint of trade, upon a consideration which shows contract was reasonable for parties to enter it, is good. Whenever a consideration appears to make it a proper and useful contract and such as cannot be set aside without injury to a fair contractor, it ought to be maintained. Scott v. Hall, 56 Ga. App. 467, 192 S.E. 920 (1937); Interstate Sec. Police, Inc. v. Citizens & S. Emory Bank, 237 Ga. 37, 226 S.E.2d 583 (1976). Nondisclosure covenant was held to be void due to the absence of any restriction upon the duration of the nondisclosure provisions and also because it was overbroad in that the covenant forbade disclosure of certain information without regard to whether the information was within scope of the employer’s legitimate business interests. Prudential Ins. Co. of Am. v. Baum, 629 F. Supp. 466 (N.D. Ga. 1986). Nondisclosure covenant executed by parties involved in a failed joint venture agree-

Contracts in Restraint of Trade, Generally (Cont’d) 3. Application (Cont’d) ment to develop a multimedia e-mail software program to be marketed to a specific company was void under O.C.G.A. § 13-8-2(a)(2) because it contained no territorial limit or limits on the scope of the restricted activity. OnBrand Media v. Codex Consulting, Inc., 301 Ga. App. 141, 687 S.E.2d 168 (2009). Hospital privileges. - Doctor’s claim that a hospital promised not to report the doctor’s conduct to the National Practitioner Data Bank if the doctor complied with the psychiatrist’s treatment plan was rejected as any such agreement would violate federal law requiring a hospital to conduct periodic appraisals of their medical staff under 42 C.F.R. § 482.22(a)(1) and to report the doctor’s resignation to the data bank under 42 U.S.C.S. §§ 11133 and 11134; any such agreement was unenforceable under O.C.G.A. §§ 13-8-1 and 13-8-2 as against public policy to provide quality health care. Taylor v. Kennestone Hosp., Inc., 266 Ga. App. 14, 596 S.E.2d 179 (2004). Waiver paragraph in contract. - Waiver paragraph in contract, providing that an independent contractor waived all of the contractor’s rights for any recovery against a billboard owner for damages incurred by the contractor, did not violate O.C.G.A. § 13-8-2(b) as the statute applied only to contract provisions purporting to indemnify or hold harmless the promisee against liability for damages, and the paragraph in question did not purport to indemnify or hold the owner harmless from damages. Holmes v. Clear Channel Outdoor, Inc., 298 Ga. App. 178, 679 S.E.2d 745 (2009). Limitation of liability provision enforceable in contract. - Provision in a contract between a developer and an architect limiting the dollar amount of the latter’s liability to the former for errors or professional negligence was not void as against public policy under O.C.G.A. § 13-8-2(b).That statute applied only to contract provisions purporting to indemnify or hold harmless the promisee against liability for damages, while the contract simply established a bargained-for cap on the liability of the architect to the developer. Precision Plan-

ning, Inc. v. Richmark Cmtys., Inc., 298 Ga. App. 78, 679 S.E.2d 43 (2009). Limitation of liability provision contained in a contract between a real estate developer and an engineering firm was enforceable because the provision represented a reasonable allocation of risks in an arms-length business transaction and did not violate the public policy underlying O.C.G.A. § 13-8-2(a) or the public policy for professional engineering practice set forth in O.C.G.A. § 43-15-1 et seq. RSN Props. v. Eng’g Consulting Servs., 301 Ga. App. 52, 686 S.E.2d 853 (2009), cert. denied, No. S10C0519, 2010 Ga. LEXIS 249 (Ga. 2010). 4. Territorial Limitation Size of territory restricted not determinitive of reasonableness. - Reasonableness as to territory depends not so much on geographical size of the territory as on reasonableness of the territorial restriction. Moore v. Dwoskin, Inc., 226 Ga. 835, 177 S.E.2d 708 (1970). For discussion regarding territorial limitation necessary for upholding of contracts in restraint of trade. - See Kinney v. Scarbrough Co., 138 Ga. 77, 74 S.E. 772, 40 L.R.A. (n.s.) 473 (1912). Covenant not to compete which applies to entire state is not always void and unenforceable. Interests of the state will be better served by judging reasonableness of territorial restrictions, considering nature of business involved, and facts surrounding each case. Barry v. Stanco Communications Prods., Inc., 243 Ga. 68, 252 S.E.2d 491 (1979). Restriction against doing business with any actual or potential customers of the employer located in a specific geographical area in which the employee had not actually done business is overbroad and unreasonable. Hulcher Servs. v. R.J. Corman R.R., 247 Ga. App. 486, 543 S.E.2d 461 (2000). Partial Restraints of Trade Partial restraints of trade are not void under O.C.G.A. § 13-8-2. - This provision merely declares existing common law prohibiting general restraints of trade, and partial restraints, as heretofore recognized, are not void. Watkins v. Avnet, Inc., 122 Ga. App. 474, 177 S.E.2d 582 (1970).

Contract in partial restraint may be upheld provided restraint is reasonable and contract is valid in other essentials. Britt v. Davis, 239 Ga. 747, 238 S.E.2d 881 (1977). Contracts in partial restraint of trade are not void as against public policy, provided those contracts are reasonable. Hood v. Legg, 160 Ga. 620, 128 S.E. 891 (1925). Distinction between general and partial restraints of trade. - See Brewer & Co. v. Lamar, Rankin & Lamar, 69 Ga. 656, 47 Am. R. 766 (1882). Reason for distinction between general and partial restraints of trade is that all general restraints tend to promote monopolies and to discourage industry, enterprise, and just competition; whereas same reason does not apply to special restraints, since, on the contrary, it may even be beneficial to the public that a particular place should not be overstocked with persons engaged in the same business. State v. Central of Ga. Ry., 109 Ga. 716, 35 S.E. 37, 48 L.R.A. 351 (1900). Whether contract in partial restraint of trade is reasonable has reference only to public interest. - Whether contract in partial restraint of trade is reasonable has no reference to contractual rights of parties themselves. It has reference only to interests of the public. Hood v. Legg, 160 Ga. 620, 128 S.E. 891 (1925). Restrictive covenants in employment contracts are considered in partial restraint of trade. Purcell v. Joyner, 231 Ga. 85, 200 S.E.2d 363 (1973); Preferred Risk Mut. Ins. Co. v. Jones, 233 Ga. 423, 211 S.E.2d 720 (1975); Orkin Exterminating Co. v. Pelfrey, 237 Ga. 284, 227 S.E.2d 251 (1976); McNease v. National Motor Club of Am., Inc., 238 Ga. 53, 231 S.E.2d 58 (1976); Fuller v. Kolb, 238 Ga. 602, 234 S.E.2d 517 (1977); Uni-Worth Enters., Inc. v. Wilson, 244 Ga. 636, 261 S.E.2d 572 (1979); Merrill Lynch, Pierce, Fenner & Smith v. Stidham, 506 F. Supp. 1182 (M.D. Ga. 1981), aff ’d in part, vacated in part on other grounds, 658 F.2d 1098 (5th Cir. 1981). Noncompetition and nonsolicitation covenants were reasonable and enforceable, the covenants were of a two-year duration and limited to a seven-county territorial area, and when prohibiting the professional activity of accounting and the solicitation of clients pursuant to the covenant were found to be reasonable in light of the firm’s need

to protect the firm’s investment in defendant’s skills. Habif, Arogeti & Wynne v. Baggett, 231 Ga. App. 289, 498 S.E.2d 346 (1998). What is partial restraint in connection with sale of business. - Restraint is partial when the restraint covers only time and locality during and in which vendee carries on business purchased, and beyond these limitations, seller is at liberty to carry on same business. Cheese Shop Int’l, Inc. v. Wirth, 304 F. Supp. 861 (N.D. Ga. 1969). Contract not to engage in certain business, limited in time and territory, constitutes partial restraint. Bullock v. Johnson, 110 Ga. 486, 35 S.E. 703 (1900). Enforceability of partial restraints of trade. - If a contract is in partial restraint of trade only, the contract may be supported, provided restraint is reasonable and contract is founded on a consideration. State v. Central of Ga. Ry., 109 Ga. 716, 35 S.E. 37, 48 L.R.A. 351 (1900); Bullock v. Johnson, 110 Ga. 486, 35 S.E. 703 (1900); Jefferson v. Markert & Co., 112 Ga. 498, 37 S.E. 758 (1900). Contract only in partial restraint of trade may be upheld, provided restraint is reasonable, and contract is valid in other essentials. Kutash v. Gluckman, 193 Ga. 805, 20 S.E.2d 128 (1942); Orkin Exterminating Co. v. Dewberry, 204 Ga. 794, 51 S.E.2d 669 (1949), overruled on other grounds, Barry v. Stanco Communications Prods., Inc., 243 Ga. 68, 252 S.E.2d 491 (1979); Coffee Sys. v. Fox, 226 Ga. 593, 176 S.E.2d 71 (1970); Federated Mut. Ins. Co. v. Whitaker, 232 Ga. 811, 209 S.E.2d 161 (1974). In deciding whether a partial restraint of trade is reasonable, a court will look to whole subject matter of contract, kind and character of business, the business’s location, purpose to be accomplished by restriction, and all circumstances which show intention of parties, and which must have entered into making of contract. Kutash v. Gluckman, 193 Ga. 805, 20 S.E.2d 128 (1942). While contracts in general restraint of trade are void, a contract concerning a lawful and useful business in partial restraint of trade and reasonably limited as to time and place is not void. Black v. Horowitz, 203 Ga. 294, 46 S.E.2d 346 (1948); Burdine v. Brooks, 206 Ga. 12, 55 S.E.2d 605 (1949); Aladdin, Inc. v. Krasnoff, 214 Ga. 519, 105

Partial Restraints of Trade (Cont’d) S.E.2d 730 (1958); Spalding v. Southeastern Personnel of Atlanta, Inc., 222 Ga. 339, 149 S.E.2d 794 (1966). Contracts in general restraint of trade are void but a contract concerning a lawful and useful business in partial restraint of trade and reasonably limited as to time and territory, and otherwise reasonable, is not void. Nelson v. Woods, 205 Ga. 295, 53 S.E.2d 227 (1949); Turner v. Robinson, 214 Ga. 729, 107 S.E.2d 648 (1959); Thomas v. Coastal Indus. Servs., Inc., 214 Ga. 832, 108 S.E.2d 328 (1959); Coffee Sys. v. Fox, 226 Ga. 593, 176 S.E.2d 71 (1970); Moore v. Dwoskin, Inc., 226 Ga. 835, 177 S.E.2d 708 (1970); Federated Mut. Ins. Co. v. Whitaker, 232 Ga. 811, 209 S.E.2d 161 (1974). Certain agreements in partial restraint of trade are generally upheld as valid, but before the agreements can be upheld the court must find that restraints imposed are reasonably necessary to protect promisee’s business. Thus, restraints must be no broader than necessary to protect promisee, and this surely implies time and place restrictions. Cheese Shop Int’l, Inc. v. Wirth, 304 F. Supp. 861 (N.D. Ga. 1969). Contract in partial restraint of trade is enforceable if it is reasonably limited as to time and territory and not otherwise unreasonable. Watkins v. Avnet, Inc., 122 Ga. App. 474, 177 S.E.2d 582 (1970). Preventing competition and restraining trade were said to be synonymous terms in laws which prohibit general and unreasonable restraints. Limited restraints, however, if not greater than protection which other party requires, are not outlawed. Interstate Sec. Police, Inc. v. Citizens & S. Emory Bank, 237 Ga. 37, 226 S.E.2d 583 (1976). Restrictive Covenants Ancillary to Employment Contracts 1. In General Public policy generally disfavors covenants not to compete ancillary to employment contracts. - Covenants not to compete ancillary to employment contracts must be scrutinized in terms of the public policy generally disfavoring such contracts as restraints on trade and competition. Preferred

Risk Mut. Ins. Co. v. Jones, 233 Ga. 423, 211 S.E.2d 720 (1975). Restraints on future employment must be reasonable as to both time and territory. - Contract without limitation as to space or territory, although limited as to time, not to engage in a particular trade or business, is unenforceable as being against policy of the law. Kinney v. Scarbrough Co., 138 Ga. 77, 74 S.E. 772, 40 L.R.A. (n.s.) 473 (1912); Roberts v. H.C. Whitmer Co., 46 Ga. App. 839, 169 S.E. 385 (1933). Negative covenant in a contract, ancillary to contract of employment, whereby employee is forbidden to enter into employment in competition with one’s employer for a certain period of time after leaving service of employer, but which covenant is not limited as to space or territory, is in general restraint of trade, contrary to public policy of this state, and unenforceable. Vendo Co. v. Long, 213 Ga. 774, 102 S.E.2d 173 (1958). It is essential to validity of restraints on future employment that the restraints be reasonable as to both time and territory. Stewart v. American Home Mut. Life Ins. Co., 107 Ga. App. 105, 129 S.E.2d 367 (1962). With respect to restrictive agreements ancillary to contract of employment, mere fact that covenant is unlimited as to either time or territory is sufficient to condemn the covenant as unreasonable. Cheese Shop Int’l, Inc. v. Wirth, 304 F. Supp. 861 (N.D. Ga. 1969); Coffee Sys. v. Fox, 226 Ga. 593, 176 S.E.2d 71 (1970). Regarding negative covenant ancillary to a contract of employment, it is essential to validity of the contract that the contract contain a reasonable limitation both as to time and territory. Edwin K. Williams & Co. - E. v. Padgett, 226 Ga. 613, 176 S.E.2d 800 (1970). It is essential to validity of an employment contract that a restrictive covenant contain a reasonable limitation both as to time and territory. Heller v. Margaro, 148 Ga. App. 591, 252 S.E.2d 11 (1978). Enforceability of restrictive covenants in employment contracts. - When restrictive clause in contract of employment is supported by sufficient consideration in form of mutual promises and has been rendered definite by performance of main contract, and is reasonable as to time and area, it is

not void under this statute or Ga. Const. 1976, Art. III, Sec. VIII, Para. VIII (see Ga. Const. 1983, Art. III, Sec. VI, Para V). Griffin v. Vandegriff, 205 Ga. 288, 53 S.E.2d 345 (1949) (see O.C.G.A. § 13-8-2). So long as a noncompetition provision in an employment contract does not adversely affect interest of public or injure obligor beyond what is necessary to protect legitimate rights of obligee, it is valid under laws of this state. Griffin v. Vandegriff, 205 Ga. 288, 53 S.E.2d 345 (1949). When restrictive covenant of partnership agreement concerns a useful and lawful business, is only in partial restraint of trade, and is reasonably limited as to time and place, the covenant is valid and enforceable. Habif v. Maslia, 214 Ga. 654, 106 S.E.2d 905 (1959). Restrictive covenants in employment contracts are void unless the covenants are reasonable as between parties, serve a proper function, as protection of legitimate interests of employer, and are not specially injurious to the public. Foster v. Union Cent. Life Ins. Co., 103 Ga. App. 420, 119 S.E.2d 289 (1961), overruled on other grounds, Brown Stove Works, Inc. v. Kimsey, 119 Ga. App. 453, 167 S.E.2d 693 (1969). Agreement in restraint of trade, ancillary to a contract of employment, support by a valuable consideration, and limited as to both time and territory, and not otherwise unreasonable, is enforceable. Mike Bajalia, Inc. v. Pike, 226 Ga. 131, 172 S.E.2d 676 (1970). Three separate elements of restrictive contracts are considered in determining whether such contracts are reasonable: (1) restraint in activity of employee, or former employee, imposed by contract; (2) territorial or geographic restraint; and (3) length of time during which covenant seeks to impose restraint. Coffee Sys. v. Fox, 226 Ga. 593, 176 S.E.2d 71 (1970); Britt v. Davis, 239 Ga. 747, 238 S.E.2d 881 (1977); ALW Mktg. Corp. v. McKinney, 205 Ga. App. 184, 421 S.E.2d 565 (1992). As a matter of law, a restrictive covenant in an employment contract is to be upheld if the covenant is not unreasonable, is founded on valuable consideration, and is reasonably necessary to protect interest of party in whose favor the covenant is imposed, and does not unduly prejudice interests of the

public. Moore v. Dwoskin, Inc., 226 Ga. 835, 177 S.E.2d 708 (1970). In determining whether restraints imposed by contract are reasonable, a court will consider nature and extent of trade or business, situation of parties, and all other circumstances. Preferred Risk Mut. Ins. Co. v. Jones, 233 Ga. 423, 211 S.E.2d 720 (1975). Considerations in determining enforceability. - The scope of activities restricted in employment contracts against competition will be found reasonable when there is a rational relationship between those activities and the activities the employee conducted for the former employer. Wesley-Jessen, Inc. v. Armento, 519 F. Supp. 1352 (N.D. Ga. 1981). In covenants against competition in employment contracts, if the restraint contracted for appears to have been for a just and honest purpose, for the protection of the legitimate interests of the party in whose favor the restraint is imposed, reasonable as between the parties, and not specially injurious to the public, the restraint will be held valid. Wesley-Jessen, Inc. v. Armento, 519 F. Supp. 1352 (N.D. Ga. 1981). Although restrictive covenants are not favored in law, when the contract is not unreasonable or overbroad and there is strong evidence of and necessity for some protection of employer’s expectations from those to whom the employer’s affairs are entrusted, restrictive covenants will not be held against public policy. Puritan/Churchill Chem. Co. v. McDaniel, 248 Ga. 850, 286 S.E.2d 297 (1982). Covenants not to compete are scrutinized to determine if the covenant’s are sufficiently limited in time and territorial effect and are otherwise reasonable, considering the interests to be protected and the effects on both parties to the contract. Rash v. Toccoa Clinic Medical Assocs., 253 Ga. 322, 320 S.E.2d 170 (1984). When restrictive covenants in employment contract are divisible, valid ones may be enforced. - When, in an employment contract, two restrictive covenants are divisible, the first, which is valid, may be enforced even though the second is invalid. Aladdin, Inc. v. Krasnoff, 214 Ga. 519, 105 S.E.2d 730 (1958). Performance of underlying contract of employment is sufficient consideration to

Restrictive Covenants Ancillary to Employment Contracts (Cont’d) 1. In General (Cont’d) support ancillary restrictive agreement which is reasonable and otherwise enforceable. Griffin v. Vandegriff, 205 Ga. 288, 53 S.E.2d 345 (1949). Independent covenant in restraint of trade, with one not a party to employment is invalid, even though supported by a consideration. Horne v. Peavy, 224 Ga. 849, 165 S.E.2d 125 (1968). When one party leased the party’s equipment to the other on a long-term basis, the facts were more closely analogous to the covenant not to compete which were ancillary to a franchise or distributorship agreement than the sale of business’ assets. Thus, the alleged noncompetition agreement between the parties, even if found to be a binding contract, were unenforceable under Georgia law when the terms of the agreement were not definite or strictly limited in time and territorial effect. American Equip. Servs., Inc. v. Evans Trailer Leasing Co., 650 F. Supp. 1266 (N.D. Ga. 1986). Mere desire to avoid competition insufficient. - Court will not accept as prima facie valid a covenant related to the territory when the employer does business when the only justification is that the employer wants to avoid competition by the employee in that area. Adcock v. Speir Ins. Agency, Inc., 158 Ga. App. 317, 279 S.E.2d 759 (1981). If one covenant is void, then all such covenants in same contract are void. - If any covenant not to compete, within a given employment contract, is unreasonable either in time, territory, or prohibited business activity, then all covenants not to compete within the same employment contract are unenforceable. Ward v. Process Control Corp., 247 Ga. 583, 277 S.E.2d 671 (1981). A nonsolicitation clause ancillary to an employment agreement was overbroad and unenforceable because the clause did not limit the prohibition to only customers with whom the employee had contact, and lacked a territorial restriction; thus, a noncompetition clause was likewise unenforceable as Georgia did not employ the ‘‘blue pencil’’ doctrine of severability. Trujillo v. Great Southern Equip. Sales, LLC, 289 Ga. App. 474, 657 S.E.2d 581 (2008).

Reasonableness of covenant is question of law. - Reasonableness of the restraints of covenants against competition in employment contracts is a question of law for determination by the court. Wesley-Jessen, Inc. v. Armento, 519 F. Supp. 1352 (N.D. Ga. 1981). Judgment on the pleadings. - The question of reasonableness in determining the validity of a restrictive covenant remains one of law based on the wording of the covenant, and if after taking the well-pleaded allegations of the complaint as true, it appears that a covenant is void on the covenant’s face such that no additional facts could save the covenant, judgment on the pleadings in favor of the defendant is appropriate. ALW Mktg. Corp. v. McKinney, 205 Ga. App. 184, 421 S.E.2d 565 (1992). Protection of employer’s image. - Restrictive covenant in employment contract between defendant broadcasting corporation and plaintiff meteorologist/television personality which prohibited competition ‘‘on air’’ in the Atlanta market for a period of six months after termination of employment was valid since the restriction was reasonably tailored to protection of defendant’s interest in the defendant’s television station’s image. Beckman v. Cox Broadcasting Corp., 250 Ga. 127, 296 S.E.2d 566 (1982). Covenant restricting supervisory work. - Covenant was overbroad because the covenant did not permit an employee to ‘‘assist, aid or abet’’ others, which, in effect, prohibited the employee from working as a supervisor or in other capacities. American Gen. Life & Accident Ins. Co. v. Fisher, 208 Ga. App. 282, 430 S.E.2d 166 (1993). Covenant not to solicit was unenforceable when the covenant prohibited a former insurance representative from accepting applications for insurance from employer’s policyholders who wished to transfer to the representative’s new company without any solicitation on the representative’s part. American Gen. Life & Accident Ins. Co. v. Fisher, 208 Ga. App. 282, 430 S.E.2d 166 (1993). Trial court erred by not determining, as a matter of law, whether noncompete agreements were enforceable; because the agreements contained neither specific territorial limits nor limited their restrictions to cus-

tomers with whom the former employees had contacts during their employment, the restrictions were unreasonable, overbroad, and unenforceable. Fellows v. All Star, Inc., 272 Ga. App. 262, 612 S.E.2d 86 (2005). Choice of law provisions. - When an employee executed a noncompete agreement in Ohio, then worked for the employer in Ohio and then in Illinois, and then moved to Georgia after going to work for a competitor of the employer, the federal district court declined to enforce the agreement’s Ohio choice of law provision, as it was would have operated in contravention of Georgia’s public policy under O.C.G.A. § 13-8-2. Keener v. Convergys Corp., 205 F. Supp. 2d 1374 (S.D. Ga. 2002), aff ’d, in part, rev’d, in part, 342 F.3d 1264 (11th Cir. Ga. 2003). 2. Territorial Limitation Reasonableness of territorial limitation of restrictive covenant in employment contract. - In determining reasonableness of territorial limitation of restrictive covenant in employment contract, courts will consider nature and extent of trade or business, situation of parties, and all other circumstances. Turner v. Robinson, 214 Ga. 729, 107 S.E.2d 648 (1959). Overly broad covenant unenforceable. - Agreement prohibiting a physician from practicing within a 20 mile radius of any of the employer’s medical centers for two years from termination, even centers where the physician never worked and those opened during the physician’s tenure, was overly broad and not enforceable. Davis v. Albany Area Primary Health Care, Inc., 233 Ga. App. 311, 503 S.E.2d 909 (1998). Reasonableness of territorial limitation. - Territorial coverage restriction in a covenant not to compete was overbroad where the 80 mile radius stated in the covenant related to the area in which the employer, rather than the employee, did business and the employer could not show a legitimate business interest for the restriction. Brunswick Floors, Inc. v. Guest, 234 Ga. App. 298, 506 S.E.2d 670 (1998). Restrictive covenant not to compete contained in former employee’s employment agreement with plaintiff-company was overbroad as to territory and scope of activities where the covenant included all of Georgia and Florida, and was not tailored to the job

the employee performed for the company, but instead, prohibited the employee from being connected in any way with a similar business. Ceramic & Metal Coatings Corp. v. Hizer, 242 Ga. App. 391, 529 S.E.2d 160 (2000). Territorial restrictions related to territory in which employee was employed are generally enforced. Merrill Lynch, Pierce, Fenner & Smith v. Stidham, 506 F. Supp. 1182 (M.D. Ga. 1981), aff ’d in part, vacated in part on other grounds, 658 F.2d 1098 (5th Cir. 1981); Adcock v. Speir Ins. Agency, Inc., 158 Ga. App. 317, 279 S.E.2d 759 (1981). Absence of geographical limitation. - Nonsolicitation clause in employment contract prohibiting solicitation of employer’s clients that employee actually contacted while serving employer is enforceable notwithstanding absence of explicit geographical limitation. W.R. Grace & Co. v. Mouyal, 262 Ga. 464, 422 S.E.2d 529 (1992). Specific territory unascertainable at time of agreement. - Territorial restriction was too indefinite on its face to be enforceable because the restriction contained no specific territory ascertainable at the time the agreement was entered. ALW Mktg. Corp. v. McKinney, 205 Ga. App. 184, 421 S.E.2d 565 (1992). 3. Time Limitation Restraint depriving one from practicing profession in restricted territory for all time is unenforceable. - Restraint or inhibition relating to the right of a person to follow a particular profession, and which deprives the person from practicing one’s profession under any and all circumstances in a restricted territory for all time is unreasonable and unenforceable. Stewart v. American Home Mut. Life Ins. Co., 107 Ga. App. 105, 129 S.E.2d 367 (1962). Covenant preventing transactions with entity which did business with employer within 12 months of termination. - When a covenant prevents a former employee from transacting any business with an entity, with the exception of company vendors, which had transacted business with the company within the 12 months immediately preceding the date on which the employment of employee terminated with the company, such covenant is unreasonable regarding the scope of prohibited business activities. Ward v. Process

Restrictive Covenants Ancillary to Employment Contracts (Cont’d) 3. Time Limitation (Cont’d) Control Corp., 247 Ga. 583, 277 S.E.2d 671 (1981). 4. Application Restrictions placing greater limitations than are necessary to protect employer render contract void and unenforceable. Watkins v. Avnet, Inc., 122 Ga. App. 474, 177 S.E.2d 582 (1970). Covenant not to compete in an employment contract that was overbroad as to the contract’s territorial coverage and the scope of activity prohibited was unenforceable since the territorial coverage prohibition could not be determined with certainty at the time the employee signed the contract and the activities prohibited included holding stock in other companies working in similar areas. Harville v. Gunter, 230 Ga. App. 198, 495 S.E.2d 862 (1998). Covenant preventing employee from working for competitor in any capacity is unnecessary for employer’s protection. - Covenant wherein employee agreed not to accept employment with a competitor in any capacity imposes a greater limitation upon employee than is necessary for protection of employer and therefore is unenforceable. Uni-Worth Enters., Inc. v. Wilson, 244 Ga. 636, 261 S.E.2d 572 (1979). Three year and world-wide restrictions unenforceable. - Covenant prohibiting former employee from working in any capacity in the world in the business of developing or selling electronic firearm systems for three years following the employee’s termination was overbroad in terms of territorial coverage, the scope of prohibited activity, and substantially limited former employee’s right to earn a living. Consequently, the trial court did not err in concluding that the covenant at issue was an unreasonable restraint on trade and therefore unenforceable. Firearms Training Sys. v. Sharp, 213 Ga. App. 566, 445 S.E.2d 538 (1994). Noncompetition agreement alone not personal service contract. - While a noncompetition agreement joined with affirmative promises is a personal services contract which terminates upon the death of the promisor, a noncompetition agreement

standing alone, with no affirmative promises, is not. Mail & Media, Inc. v. Rotenberry, 213 Ga. App. 826, 446 S.E.2d 517 (1994). Protection of customers by employers. - While it might have been reasonable to prohibit an employee from selling or soliciting memberships in other motor clubs in territories in which the employee had worked for a period of three years following termination, it was unreasonable to prohibit an employee from engaging in motor club or automobile association business without restricting the employee as to kind and character of activity in which the employee could not engage. McNease v. National Motor Club of Am., Inc., 238 Ga. 53, 231 S.E.2d 58 (1976). Arguments can be made that a covenant is not too indefinite to be enforced where it merely prohibits employee from calling upon or taking away customers or accounts of employer solicited or contacted by employee during employee’s term of employment. Uni-Worth Enters., Inc. v. Wilson, 244 Ga. 636, 261 S.E.2d 572 (1979). Court will enforce an agreement prohibiting an employee from pirating a former employer’s customers served by the employee, during the employment, at the employer’s direct or indirect expense. Adcock v. Speir Ins. Agency, Inc., 158 Ga. App. 317, 279 S.E.2d 759 (1981). Restrictive covenant in employment prohibiting competitive activity within 50-mile radius was overly broad. - A contractual provision which prohibited employee, upon termination of employment, from entering into competitive activity within 50-mile radius of where employer was operating was overly broad and unreasonably restrained trade due to chilling effect that may be had upon post-employment competitive activity because of employee’s inability to forecast with certainty the territorial extent of duty owing the former employer. Durham v. Stand-By Labor of Ga., Inc., 230 Ga. 558, 198 S.E.2d 145 (1973). Protection of confidential business information. - When a duty has been imposed upon an employee pursuant to contract not to disclose confidential business information upon termination of employment, public policy is swung in favor of protecting these commercial intangibles and of preventing unfair methods of exploiting them in breach

of duty. Wesley-Jessen, Inc. v. Armento, 519 F. Supp. 1352 (N.D. Ga. 1981). Law firm fee schedule based on stage of litigation. - Fee schedule between the attorney and the law firm based on the stage of litigation of each case was inextricably linked with the agreement not to compete and as such constitutes an unenforceable restraint on trade because the agreement not to compete contained no limitation on duration. William N. Robbins, P.C. v. Burns, 227 Ga. App. 262, 488 S.E.2d 760 (1997). Overly broad noncompete clause. - Employment contract which contained noncompete and nonsolicitation clauses was deemed unenforceable, pursuant to Ga. Const. 1983, Art. III, Sec. VI, Para. V(c) and O.C.G.A. § 13-8-2, because the noncompete clause was overly broad in that the clause attempted to preclude the former employee not only from performing painting services for prior clients, but also from acting as a sales person in the decorative or faux painting business; there was no evidence that the employer had employed ‘‘sales persons’’ or that the employee had ever acted in that capacity on behalf of the employer, and summary judgment to the employee was proper. Whimsical Expressions, Inc. v. Brown, 275 Ga. App. 420, 620 S.E.2d 635 (2005). Noncompetition agreement that provided that an employee of a drug and alcohol testing service would not compete with the employer ‘‘in any area of business’’ of the employer’s, including solicitation of existing accounts, was unreasonable as overly broad and indefinite; when read as a whole, the agreement was plainly intended to prevent any type of competing activity whatsoever, with the reference to solicitation merely being illustrative of one type of prohibited activity. Stultz v. Safety & Compliance Mgmt., 285 Ga. App. 799, 648 S.E.2d 129 (2007), cert. denied, 2007 Ga. LEXIS 812 (Ga. 2007). Nonsolicitation of customer covenants not overly broad. - Trial court erred in striking down nonsolicitation of customer covenants in an employment contract between former employees and their employer as the restrictive covenants were reasonable, limited in scope, and not against public policy under Ga. Const. 1983, Art. III, Sec. VI, Para. V(c) and O.C.G.A. § 13-8-2; the covenants only

included current, existing clients and not former customers of the employer, the employees were only prohibited from soliciting the current customers that the employees had served during their employment, and the employees were only prohibited from selling the customer’s insurance or employee benefit plans that were offered by the employer during the employee’s employment. Palmer & Cay of Ga., Inc. v. Lockton Cos., Inc., 284 Ga. App. 196, 643 S.E.2d 746 (2007), cert. denied, 2007 Ga. LEXIS 503 (Ga. 2007). Restrictive Covenants Ancillary to Sale of Business 1. In General Greater latitude is allowed for covenants relating to sale of business than those relating to employment. Watkins v. Avnet, Inc., 122 Ga. App. 474, 177 S.E.2d 582 (1970). Covenants not to compete incorporated in agreements for sale of a business or the business’s assets have been given greater latitude and broadness in their interpretation and enforcement by Georgia courts than those noncompetition covenants ancillary to contracts of employment. Farmer v. Airco, Inc., 231 Ga. 847, 204 S.E.2d 580 (1974). Latitude of restrictive covenants greater in business deals. - In determining the reasonableness of a restrictive covenant, greater latitude is allowed in those covenants relating to sale of a business, or dissolution of a partnership, than in those covenants ancillary to an employment contract. Orkin Exterminating Co. v. Dewberry, 204 Ga. 794, 51 S.E.2d 669 (1949), overruled on other grounds, Barry v. Stanco Communications Prods., Inc., 243 Ga. 68, 252 S.E.2d 491 (1979); Foster v. Union Cent. Life Ins. Co., 103 Ga. App. 420, 119 S.E.2d 289 (1961), overruled on other grounds, Brown Stove Works, Inc. v. Kimsey, 119 Ga. App. 453, 167 S.E.2d 693 (1969). Restraints valid in sale of business may be unreasonable in employment contract. - Restraints which would be valid in sale of a business may be found to be unreasonable where employer seeks to restrain employees from further employment. Stewart v. American Home Mut. Life Ins. Co., 107 Ga. App. 105, 129 S.E.2d 367 (1962).

Restrictive Covenants Ancillary to Sale of Business (Cont’d) 1. In General (Cont’d) Noncompete agreement. - When partners filed a breach of contract action against a doctor, who was a minority shareholder in a corporation that was party to a joint venture, one of the partners, the trial court improperly used the middle level of scrutiny to evaluate whether the noncompete agreement was an impermissible restraint of trade under O.C.G.A. § 13-8-2 because the agreement was entered into incident to the sale of a partnership interest; hence, summary judgment was improperly granted to the doctor as to the doctor’s liability under the agreement. West Coast Cambridge, Inc. v. Rice, 262 Ga. App. 106, 584 S.E.2d 696 (2003).

enforceable. - It has been settled by this court that a contract in reference to selling the good will of the vendor, and stipulating that the vendor will not enter into or engage in a similar business, if reasonable as to time and place, is enforceable. Rakestraw v. Lanier, 104 Ga. 188, 30 S.E. 735, 69 Am. St. R. 154 (1898); Jefferson v. Markert & Co., 112 Ga. 498, 37 S.E. 758 (1900). Duty not to compete for customers existing at time of sale of business is reasonable. - Duty not to compete for customers is reasonable and definite where it extends only to those customers existing at time of sale as shown by seller’s accounts receivable. Farmer v. Airco, Inc., 231 Ga. 847, 204 S.E.2d 580 (1974). Gambling and Wagering Contracts 1. In General

2. Territorial Limitation Covenant prohibiting vendor from competing within territory to which vendee plans to extend may be valid where area which it embraces is not greater than that which parties may fairly anticipate the extended business will cover. Orkin Exterminating Co. v. Dewberry, 204 Ga. 794, 51 S.E.2d 669 (1949), overruled on other grounds, Barry v. Stanco Communications Prods., Inc., 243 Ga. 68, 252 S.E.2d 491 (1979). Restriction related to sale of business may, where appropriate, extend to all territory covered by such business. - Restrictive covenant which affords a fair protection to party in whose favor covenant is made, and is not injurious to the public may extend to all territory covered by business, the good will of which has been sold. Farmer v. Airco, Inc., 231 Ga. 847, 204 S.E.2d 580 (1974). 3. Application Covenant connected with sale of business limited as to time but not territory is unenforceable. Seay v. Spratling, 133 Ga. 27, 65 S.E. 137 (1909); Bonner v. Bailey, 152 Ga. 629, 110 S.E. 875 (1922). Covenant not to reenter business like that sold within a limited territory is binding. Holtman v. Knowles, 141 Ga. 613, 81 S.E. 852 (1914); Morris-Forrester Oil Co. v. Taylor, 158 Ga. 201, 122 S.E. 680 (1924). Restrictive covenant in contract selling good will, reasonable as to time and place, is

Gambling contract or one based upon a gaming consideration is void and unenforceable. Tatham v. Freeman, 51 Ga. App. 477, 180 S.E. 871 (1935). Gambling transactions contravene public policy of Georgia and constitute obligations unenforceable in Georgia courts. Gulf Collateral, Inc. v. Morgan, 415 F. Supp. 319 (S.D. Ga. 1976). Gambler shall not be protected in the gambler’s unlawful gains. Gulf Collateral, Inc. v. Morgan, 415 F. Supp. 319 (S.D. Ga. 1976). In gambling contract, one party is certain to lose. - In an ordinary contract both parties may ultimately gain by entering into agreement; where in a gambling contract one of the parties is certain to lose, and by terms of such contract consideration must fall to one or the other upon determination of specified event. Martin v. Citizens’ Bank, 177 Ga. 871, 171 S.E. 711 (1933). Absence of purpose to deal with actual property marks distinction between legal and gambling contracts in reference to sale of personal property. Martin v. Citizens’ Bank, 177 Ga. 871, 171 S.E. 711 (1933). Mere insertion of provision for forfeiture does not constitute gambling, nor make of agreement a gambling contract. Martin v. Citizens’ Bank, 177 Ga. 871, 171 S.E. 711 (1933). Contracts known as options are not to be classed as gambling contracts under laws of

Georgia, nor are the contracts otherwise condemned as unlawful for any reason. Martin v. Citizens’ Bank, 177 Ga. 871, 171 S.E. 711 (1933). Georgia courts have jurisdiction if gaming contract is made or bet is laid in Georgia. - Fact that loser of bet resides in England and that money is paid from that country does not necessarily render matter not within the jurisdiction of the courts of this state; it is sufficient if gaming contract is made or bet is laid in State of Georgia. Tatham v. Freeman, 51 Ga. App. 477, 180 S.E. 871 (1935). Wagering contracts are against policy of the law and are unenforceable. Gulf Collateral, Inc. v. Morgan, 415 F. Supp. 319 (S.D. Ga. 1976). Suit to enforce gambling debt judgment of another state. - O.C.G.A. § 13-8-2 did not preclude giving full faith and credit to a New Jersey judgment entered to enforce a gambling debt, where the Georgia suit was not on the gambling debt itself, but was rather a suit to domesticate a valid judgment of a sister state. Hargreaves v. Greate Bay Hotel & Casino, 182 Ga. App. 852, 357 S.E.2d 305 (1987). Wagering contract defined. - Wagering contract has been defined to be one in which parties in effect stipulate that the parties shall gain or lose upon happening of uncertain event in which the parties have no interest, except that arising from possibility of such gain or loss. Martin v. Citizens’ Bank, 177 Ga. 871, 171 S.E. 711 (1933). So long as something is actually bought, sold, or contracted for, there is no wagering, not even if thing contracted for does not then exist. Martin v. Citizens’ Bank, 177 Ga. 871, 171 S.E. 711 (1933). Purely speculative contract is not necessarily a wagering contract. Martin v. Citizens’ Bank, 177 Ga. 871, 171 S.E. 711 (1933). Speculation is not per se unlawful. Martin v. Citizens’ Bank, 177 Ga. 871, 171 S.E. 711 (1933). 2. Application Betting upon a game of golf is gaming. Tatham v. Freeman, 51 Ga. App. 477, 180 S.E. 871 (1935). Side bet placed upon ultimate outcome or final result of any game whatever constitutes gaming. Tatham v. Freeman, 51 Ga. App. 477, 180 S.E. 871 (1935).

Betting that one game competitor, among many, will win is a side bet upon a game. Tatham v. Freeman, 51 Ga. App. 477, 180 S.E. 871 (1935). Fact that gaming contract is made by insurance company does not render contract valid. - Fact that loser of a bet is an insurance company and that contract is made by such company does not render such contract valid and not a gaming contract. Tatham v. Freeman, 51 Ga. App. 477, 180 S.E. 871 (1935). Bet upon rise or fall of price of stock or merchandise constitutes a wager. - When there is no real transaction, but only a bet upon rise or fall of price of stock or article of merchandise in exchange or market, one party agreeing to pay if there is a rise, and the other party agreeing to pay if there is a fall in price, the agreement is a pure wager. Martin v. Citizens’ Bank, 177 Ga. 871, 171 S.E. 711 (1933). 3. Insurance Contracts Policy of insurance which contemplates anything beyond indemnity is a mere wager. Fireman’s Fund Ins. Co. v. Pekor, 106 Ga. 1, 31 S.E. 779 (1898). Contract insuring life of one in whom party beneficiary has no insurable interest is void. - Contract for insurance upon life of another party taken out by one without any insurable interest is a wagering contract contrary to public policy and is therefore null and void. West v. Sanders, 104 Ga. 727, 31 S.E. 619 (1898). Contract of insurance entered into between one named as beneficiary therein and an insurance company, insuring another in whose life the beneficiary has no insurable interest, is void from the contract’s inception, being a wagering contract and against public policy. Wilson v. Progressive Life Ins. Co., 61 Ga. App. 617, 7 S.E.2d 44 (1940). Courts should not concern themselves with disposition of proceeds of ‘‘wagering’’ insurance policies. Exchange Bank v. Loh, 104 Ga. 446, 31 S.E. 459, 44 L.R.A. 372 (1898); West v. Sanders, 104 Ga. 727, 31 S.E. 619 (1898). Rule restricting execution of insurance contracts to persons having insurable interests is founded on public policy. Gordon v. Gulf Am. Fire & Cas. Co., 113 Ga. App. 755, 149 S.E.2d 725 (1966).

Contracts of Maintenance or Champerty Contracts of maintenance or champerty are void and cannot be enforced. - This rule applies alike to implied contracts. Sapp v. Davids, 176 Ga. 265, 168 S.E. 62 (1933). What constitutes a champertous contract. - There are two essential elements of a champertous agreement: first, there must be undertaking by one person to defray expense of whole or part of another’s suit; second, agreement or promise on part of latter to divide with former proceeds of litigation in event the litigation proves successful. Anderson v. Anderson, 12 Ga. App. 706, 78 S.E. 271 (1913); Clark v. Harrison, 182 Ga. 56, 184 S.E. 620 (1936). Champerty is the unlawful maintenance of a suit in consideration of a bargain to have part of thing in dispute, or some profit out of the litigation, and promise to pay expenses or costs, seems to be essential to such a contract. Sapp v. Davids, 176 Ga. 265, 168 S.E. 62 (1933). Champerty is defined as a bargain by a champertor with a plaintiff or defendant for a portion of the matter involved in a suit in case of a successful termination of the ac-

tion, which champertor undertakes to maintain or carry on at champertor’s own expense. Such a contract is unenforceable between parties. Brown & Huseby, Inc. v. Chrietzberg, 242 Ga. 232, 248 S.E.2d 631 (1978). When there is no contract of employment, there can be no champerty or maintenance. Clark v. Harrison, 182 Ga. 56, 184 S.E. 620 (1936). Contract for fee to be paid out of proceeds of suit is not champertous. Twiggs v. Chambers, 56 Ga. 279 (1876). A contract between client and attorney, wherein it is stipulated that attorney shall receive a certain percent for collection of claim, upon or out of amount collected, is not champertous, there being no agreement on part of attorney to bear expenses of litigation, or to save plaintiff harmless from costs, as is essential to make out common-law offense of champerty. Moses v. Bagley & Sewell, 55 Ga. 283 (1875). Prohibition of champertous contracts does not affect pending cause of action underlying such contracts. Ellis v. Smith & Bussey, 112 Ga. 480, 37 S.E. 739 (1900).

OPINIONS OF THE ATTORNEY GENERAL O.C.G.A. § 13-8-2 and constitutional provision have same meaning. - Supreme Court has held that Ga. Const. 1976, Art. III, Sec. VIII, Para. VIII (see, now, Ga. Const. 1983, Art. III, Sec. VI, Para. V) is an embodiment of the common-law rule which prohibited contracts in general restraint of trade, and thus that it has same meaning as this statute which states that contracts in general restraint of trade cannot be enforced. 1960-61 Op. Att’y Gen. p. 429 (see O.C.G.A. § 13-8-2). Contracts in partial restraint of trade are valid if reasonable and not injurious to public interest. 1960-61 Op. Att’y Gen. p. 429. Rule as to partial restraints of trade is applicable to public service corporations. 1960-61 Op. Att’y Gen. p. 429. Contract by public official which hampers or restricts performance of the official’s public duties contravenes public policy. 1958-59 Op. Att’y Gen. p. 241. Public offices may not be bought and sold, such agreements being contrary to public

policy and void at common law. 1958-59 Op. Att’y Gen. p. 241. Insurer’s partial payment of insured’s attorney’s fees, by itself, does not constitute maintenance. - Although by paying for at least a portion of an insured’s attorney’s fees an insurer would assist insured in defraying expenses of litigation, that fact alone does not require a contract to be regarded as a contract of maintenance. 1974 Op. Att’y Gen. No. 74-48. Department of Offender Rehabilitation and the department’s director cannot divest themselves of duty of selecting wardens. - Duty of selecting and employing wardens is vested exclusively in State Board of Corrections (now Department of Offender Rehabilitation) and director (now commissioner); the board and the director are to exercise their informed and expert judgment in selecting and discharging such officials, and any contract or agreement whereby they seek to divest themselves of that discretion, power, and judgment is void as being con-

trary to public policy. 1958-59 Op. Att’y Gen. p. 241. RESEARCH REFERENCES Am. Jur. 2d. - 17 Am. Jur. 2d, Contracts, 146, 155, 163 et seq., 181, 182, 204, 205. Am. Jur. Proof of Facts. - Enforceability of Covenant Not to Compete, 8 POF2d 663. Enforcement of Casino Gambling Debts, 71 POF3d 193. Enforcement of International Gambling Debts, 87 POF3d 347. C.J.S. - 17 C.J.S., Contracts, §§ 29, 215 et seq., 273. ALR. - Purchase of cause of action by attorney as champertous, 4 ALR 173. Validity of individual contract by director to put or maintain a designated person in office, 12 ALR 1070; 45 ALR 795. Rights and remedies of one whose contract for a free or reduced service rate with public utility in consideration of a grant of property or privileges is nullified by public authority, 14 ALR 252. Validity of contract by agent for compensation from third person for negotiating loan or sale with principal, 14 ALR 464. Innocence of the person threatened as affecting the rights or remedies in respect of contracts made, or money paid, to prevent or suppress a criminal prosecution, 17 ALR 325. Validity of agreement by bailee of instrumentality to purchase his supplies from bailor, 17 ALR 392. Validity of agreement to pay an officer or employee of a bank or trust company to disclose the existence of, or to assist one to establish, a deposit, 18 ALR 979. Elements bearing directly upon the quality of a contract as affecting the character of one as independent contractor, 20 ALR 684. Validity and enforceability of restrictive covenant in contracts of employment, 20 ALR 861; 29 ALR 1331; 52 ALR 1362; 67 ALR 1002; 98 ALR 963. Validity of lobbying contracts, 29 ALR 157; 67 ALR 684. Right of manufacturer to make its warranties conditional on nonuse of accessories manufactured by others, and to require its agents not to handle them, 29 ALR 235. Validity and enforceability of restrictive covenants in contracts of employment, 29

ALR 1331; 52 ALR 1362; 67 ALR 1002; 98 ALR 963. Judgments enforcing contract contrary to public policy as subject to collateral attack, 30 ALR 1100. Laundry business as within statute relating to monopolies, 31 ALR 533. Validity of contract for repayment of embezzled money, 32 ALR 422. Right of manufacturer, producer, or wholesaler to control resale price, 32 ALR 1087; 103 ALR 1331; 125 ALR 1335. Contract for services in connection with attempt to prevent a criminal investigation or prosecution, 33 ALR 779. Validity of agreement for sale of information as to claims or property rights, 34 ALR 1537. Incontestable clause as excluding a defense based upon public policy, 35 ALR 1491; 170 ALR 1040. Public policy in respect of associations or combinations of public contractors and their rules and regulations, 45 ALR 549. Validity of individual contract by director or stockholder to put or maintain a designated person in office, 45 ALR 795. Insurance under Workmen’s Compensation Act as coextensive with the insured’s liability under act, 45 ALR 1329; 108 ALR 812. Telegraph ticker service, 45 ALR 1379. Agreement conditional upon obligor securing public office, 45 ALR 1399. Validity of contract to testify, 45 ALR 1423. Validity of contract to influence administrative or executive officer or department, 46 ALR 196; 148 ALR 768. Validity and construction of contract or option on purchase of corporate stock by employee for resale thereof to original seller on termination of employment, 48 ALR 625; 66 ALR 1182. Validity and construction, as regards buildings not on right of way, of contract relieving railroad from liability for destruction of buildings, 48 ALR 1003; 51 ALR 638. Application of anti-trust laws to combinations to maintain prices of commodities as affected by reasonableness of prices fixed, 50 ALR 1000.

Validity and enforceability of restrictive covenants in contracts of employment, 52 ALR 1362; 67 ALR 1002; 98 ALR 963. Enforceability of contract not in itself opposed to law or public policy but which may aid incidentally in evasion or violation of the law or public policy, 53 ALR 1364. Effect on insurance contract of wagering assignment thereof, 53 ALR 1403. Validity of contract as affected by public policy as an independent question for the federal courts, or one as to which they are bound to follow the decisions of the state court, 57 ALR 435. Validity of contract which impairs or tends to impair the ability of a public service corporation to serve the public, 58 ALR 804. Validity of contract to influence third person with respect to disposal of property at death or by gift during lifetime, 61 ALR 646. Validity of agreement of stockholder not to engage in business in which corporation is engaged, 63 ALR 316. Validity of contract to induce neighboring property owners to consent, or to withdraw objection, to erection of building or other private structure, 65 ALR 998. Validity of lobbying contracts, 67 ALR 684. Validity of stipulation in indemnity or guaranty contract or bond making voucher, accounts, books, or other evidence of payment or loss competent, prima facie, or conclusive evidence of the fact or amount of liability, 68 ALR 330. Validity and effect of covenant or agreement of indemnity in lease, purporting to indemnify lessee against loss if use for which premises are leased proves illegal, 68 ALR 1379. Contracts entered into before death, relating to burial or cremation, or steps incident thereto, as opposed to public policy, or as proper subject of regulation by statute, 68 ALR 1525. Validity of agreement by public officer to accept less than compensation or fees fixed by law, 70 ALR 972; 118 ALR 1458; 160 ALR 490. Champerty rule or statute as applicable to tax sale, execution sale, or judicial sale, or to conveyances by persons claiming under such sales, 71 ALR 592. Right of municipality to exact of contractor additional consideration as condition of extension of time for completion of improvements, 71 ALR 904.

Validity of agreement by which one is to benefit from consent to, or promotion of, marriage between other persons, 72 ALR 2113. Removal or attempted removal of one from field of competition by inducing him to enter another’s employment as violation of Anti-monopoly Act, 74 ALR 289. Change of conditions subsequent to judgment enforcing restrictive covenant, 76 ALR 1358. What is a ‘‘manufacturing’’ business or enterprise within covenant restricting the use of real property, 81 ALR 1047. Right of manufacturer to question reasonableness of regulation by individual or private corporation which excludes use of manufacturer’s products, 81 ALR 1422. Sale of business and ‘‘good will,’’ or of interest in partnership and ‘‘good will,’’ as implying restriction against competition in absence of provision in that regard, 82 ALR 1030. Contract by one party to sell his entire output to, or to take his entire requirements of a commodity from, the other as contrary to public policy or antimonopoly statutes, 83 ALR 1173. Validity, construction, application, and effect of provision of lease exempting landlord from liability on account of condition of property, 84 ALR 654. Right of attorney to recover upon quantum meruit or implied contract for services rendered under champertous contract, 85 ALR 1365. Validity and effect of agreement between attorney and layman to divide attorney’s fees or compensation for business of third person, 86 ALR 195. Right of attorney to recover for services performed under contract procured by solicitation, 86 ALR 517. Validity and effect of agreement by property owner, by bond or other contract, to pay assessment against property for local improvement, 86 ALR 779; 127 ALR 551; 167 ALR 1030. Contract to keep out of a particular business or not to use property for a specified purpose as an unlawful restraint of trade when independent of any other contract, 91 ALR 980. Right of one not a party to a combination or contract in restraint of trade to maintain

a suit to enjoin the same or to recover damages he suffers by reason thereof, 92 ALR 185. Relation to, or nature of contract with, competitor which amounts to violation of covenant or injunction against engaging directly or indirectly in competing business, but not expressly prohibiting acceptance of employment from competitor, 93 ALR 121. Bond to indemnify public against expense of extradition or other criminal proceedings in event they are unsuccessful as contrary to public policy, 94 ALR 355. Validity of provision accelerating maturity of obligation as affected by rule against contract in restraint of trade, 96 ALR 1130. Agreement to indemnify one otherwise responsible for loss on unauthorized investment of infant’s funds or trust funds as contrary to public policy, 103 ALR 945. Validity of guaranty, by bank officers or stockholders, of deposit, 103 ALR 1032. Right of manufacturer, producer, or wholesaler to control resale price, 103 ALR 1331; 125 ALR 1335; 125 ALR 1335. Law as to champerty or maintenance as applied to agreements with respect to bringing and prosecution of claims against government or agencies of government, 106 ALR 1494. Rights and remedies of parties to an otherwise valid contract as affected by intended use for improper ulterior purpose of the writing or document by which it is evidenced as distinguished from its subject matter, 114 ALR 370. Validity and construction of contract by labor unions to continue salary or wages in whole or part or pay benefits if other party loses employment or position because of joining union, 114 ALR 1300; 125 ALR 1260. Rule that denies relief to party in pari delicto as applicable to transaction with a public officer or an official of the court, 116 ALR 1018. Suppression of will, or agreement for its suppression, as contrary to public policy or to statute in that regard, 117 ALR 1249. Validity of covenant by employee or seller of business not to enter employment of customers, clients, or patrons of the business, 119 ALR 1452. Legality of combination among building or construction contractors, 121 ALR 345. Contract in consideration of renunciation

of one’s status, or right to appointment, as guardian, executor, administrator, trustee, or other fiduciary, as contrary to public policy, 121 ALR 677. Life policy or collateral agreement under which benefits on death of one member of a group or class of policyholders who have no insurable interest in lives of one another are to be shared by surviving members, as contrary to public policy as a wagering contract, 121 ALR 725. Contract by one person to defend litigation that has been or may be instituted against another as champertous or maintenous, 121 ALR 847. Validity of note or other obligation given to prevent or discourage prosecution as affected by fact that criminal prosecution had already been commenced when obligation was given, 129 ALR 1153. Legality of combination among farmers, 130 ALR 1326. Validity of contract between governmental unit and attorney which makes compensation contingent upon results accomplished, 136 ALR 116. Judicial decisions involving ASCAP, 136 ALR 1438. Offense of barratry; criminal aspects of champerty and maintenance, 139 ALR 620. Who is nonprofessional or casual gambler within statute relating to recovery of gambling losses which in terms or by construction distinguishes between professional and nonprofessional or casual gamblers, 141 ALR 941. Validity of contract to influence administrative or executive officer or department, 148 ALR 768. Validity and enforceability of provision restricting competition after termination of employment in, or sale of, real-estate broker’s business, 149 ALR 633. Validity and enforceability of negative restrictive covenant in contract for services as affected by fact that it was not included in original contract of employment but in a subsequent contract for continuance of employment, 152 ALR 415. Usury as affecting conditional sale contract, 152 ALR 598. Restrictive clause in employment or sales contract to prevent future competition or performance of services for others as affected by breach by party seeking to enforce

it, of his own obligations under the contract, 155 ALR 652. Provisions of articles or bylaws of nonprofit corporation or association formed by business competitors whereby the amount of dues of respective members varies according to amount of business done by them, as contrary to public policy, 161 ALR 795. Operation of negative or restrictive covenant in contract of employment for a specific period, as extended by continuance in the employment after the expiration of that period, 163 ALR 405. Validity, construction, and application of guaranty of corporate stock, or dividends thereon, by one other than corporation, 170 ALR 1171. Rights and remedies in respect of property pledged for payment of gambling debt, 172 ALR 701. Enforceability, as between parties, of an executory agreement made in fraud of creditors, 172 ALR 1121. Construction and application of covenant restricting use of property to ‘‘residence’’ or ‘‘residential purposes,’’, 175 ALR 1191. Statutes prohibiting restraint on profession, trade, or business as applicable to restrictions in employment or agency contracts, 3 ALR2d 522. Obligations as between applicant for admission to charitable home, and home, respecting compensation to home, and property rights of applicant, 10 ALR2d 864. Validity and construction of provision for liquidated damages in contract with cooperative marketing association, 12 ALR2d 130. Enforceability as between the parties of agreement to purchase property at judicial or tax sale for their joint benefit, 14 ALR2d 1267. Assignment of, or succession to, statutory right of action for recovery of money lost at gambling, 18 ALR2d 999. Restrictive agreements or covenants in respect of purchase or handling of petroleum products by operator of filling station, 26 ALR2d 219. Validity and effect of promise not to make a will, 32 ALR2d 370. Validity of agreement by veteran purchasing property under loan guaranty to hold property on trust and the like for another furnishing the consideration, 33 ALR2d 1285.

Enforceability of restrictive covenant, ancillary to employment contract, as affected by duration of restriction, 41 ALR2d 15. Validity and enforceability of agreement to drop or compromise will contest or withdraw objections to probate, or of agreement to induce others to do so, 42 ALR2d 1319. Enforceability of restrictive covenant, ancillary to employment contract, as affected by territorial extent of restriction, 43 ALR2d 94. Enforceability of covenant against competition, ancillary to sale or other transfer of business, practice, or property, as affected by duration of restriction, 45 ALR2d 77; 13 ALR4th 661. Validity and effect of agreement controlling the vote of corporate stock, 45 ALR2d 799. Enforceability of covenant against competition, ancillary to sale or other transfer of business, practice, or property, as affected by territorial extent of restriction, 46 ALR2d 119. Court rules limiting amount of contingent fees or otherwise imposing conditions on contingent fee contracts, 77 ALR2d 411. Validity of contractual stipulation or provision waiving debtor’s exemption, 94 ALR2d 967. Validity, construction, and effect of lessor’s covenant against use of his other property in competition with the lessee-covenantee, 97 ALR2d 4. Attorney’s recovery in quantum meruit for legal services rendered under a contract which is illegal or void as against public policy, 100 ALR2d 1378. Rendering financial or other assistance to another as breach of covenant not to compete, 1 ALR3d 778. Validity and construction of contract exempting hospital or doctrine from liability for negligence to patient, 6 ALR3d 704. Validity and construction of statute regulating dealings between automobile manufacturers, distributors, and dealers, 7 ALR3d 1173. Validity and propriety of arrangement by which attorney pays or advances expenses of client, 8 ALR3d 1155. Validity, enforceability, and effect of provision in seamen’s employment contract stipulating the maximum recovery for scheduled personal injuries, 9 ALR3d 417.

Validity, construction, and effect of agreement, in connection with real-estate lease or license by railroad, for exemption from liability or for indemnification by lessee or licensee, for consequences of railroad’s own negligence, 14 ALR3d 446. Enforceability of transaction entered into pursuant to referral sales arrangement, 14 ALR3d 1420. Validity, construction, and effect of provision of lease exempting landlord or tenant from liability on account of fire, 15 ALR3d 786. Covenant restricting use of land, made for purpose of guarding against competition, as running with land, 25 ALR3d 897. Employee’s duty, in absence of express contract, not to disclose or use in new employment special skills or techniques acquired in earlier employment, 30 ALR3d 631. Waiver of right to widow’s allowance by antenuptial agreement, 30 ALR3d 858. Zoning or other public restrictions on the use of property as affecting rights and remedies of parties to contract for the sale thereof, 39 ALR3d 362. Validity, in contract for installment sale of consumer goods, or commercial paper given in connection therewith, of provision waiving, as against assignee, defenses good against seller, 39 ALR3d 518. Validity and construction of prescription drug insurance plans, 42 ALR3d 897. Validity and construction of state and municipal enactments regulating lobbying, 42 ALR3d 1046. Recovery against physician on basis of breach of contract to achieve particular result or cure, 43 ALR3d 1221. Validity and construction of restrictive covenant controlling architectural style of buildings to be erected on property, 47 ALR3d 1232. Validity of exculpatory clause in lease exempting lessor from liability, 49 ALR3d 321. Validity and construction of restrictive covenant not to compete ancillary to franchise agreement, 50 ALR3d 746. Sufficiency of consideration for employee’s covenant not to compete, entered into after inception of employment, 51 ALR3d 825. Validity of pyramid distribution plan, 54 ALR3d 217.

Insurable interest of brother or sister in life of sibling, 60 ALR3d 98. Validity and construction of provision (escalator clause) in land contract or mortgage that rate of interest payable shall increase if legal rate is raised, 60 ALR3d 473. Enforceability, insofar as restrictions would be unreasonable, of contract containing unreasonable restrictions on competition, 61 ALR3d 397. Validity and construction of contractual restrictions on right of medical practitioner to practice, incident to sale of practice, 62 ALR3d 918. Validity and construction of contractual restrictions on right of medical practitioner to practice, incident to partnership agreement, 62 ALR3d 970. Validity and construction of contractual restrictions on right of medical practitioner to practice, incident to employment agreement, 62 ALR3d 1014. Liability of subcontractor upon bond or other agreement indemnifying general contractor against liability for damage to person or property, 68 ALR3d 7. Validity and construction of contract exempting agricultural fair or similar bailee from liability for articles delivered for exhibition, 69 ALR3d 1025. Validity and construction of ‘‘no damage’’ clause with respect to delay in building or construction contract, 74 ALR3d 187. Validity and construction of contract between hospital and physician providing for exclusive medical services, 74 ALR3d 1268. Application of state antitrust laws to athletic leagues or associations, 85 ALR3d 970. Doctrine of unconscionability as applied to insurance contracts, 86 ALR3d 862. Practices forbidden by state deceptive trade practice and consumer protection acts, 89 ALR3d 449. Validity of release of prospective right to wrongful death action, 92 ALR3d 1232. What constitutes contract between husband or wife and third person promotive of divorce or separation, 93 ALR3d 523. Liability for interference with invalid or unenforceable contracts, 96 ALR3d 1294. Restrictive covenants as to height of structures or buildings, 1 ALR4th 1021. Validity and construction of contractual restriction on right of accountant to practice, incident to sale of practice or with-

drawal from accountancy partnership, 13 ALR4th 661. Validity and effect of stipulation in contract to effect that it shall be governed by law of particular state which is neither place where contract is made nor place where it is to be performed, 16 ALR4th 967. Validity of contractual provision limiting place or court in which action may be brought, 31 ALR4th 404. Enforceability of covenant not to compete involving radio or television personality, 36 ALR4th 1139. Propriety, under state law, of manufacturer’s or supplier’s refusal to sell medical product to individual physician, hospital, or clinic, 45 ALR4th 1006. Covenants to reimburse former employer for lost business, 52 ALR4th 139. Modern status of view as to validity of premarital agreements contemplating divorce or separation, 53 ALR4th 22. Enforceability of premarital agreements governing support or property rights upon divorce or separation as affected by fairness or adequacy of those terms - modern cases, 53 ALR4th 161. Enforceability of sale-of-business agreement not to compete against nonsigner or nonowning signer, 60 ALR4th 294.

Anticompetitive covenants: aerial spray dust business, 60 ALR4th 965. Validity, construction, and application of state statutes regulating dealings between automobile manufacturers, dealers, and franchisees, 82 ALR4th 624. Enforceability, by purchaser or successor of business, of covenant not to compete entered into by predecessor and its employees, 12 ALR5th 847. ‘‘Unconscionability,’’ under UCC § 2-302, of bank’s letter of credit or other financing arrangements, 15 ALR5th 365. Validity, construction, and effect of agreement exempting operator of amusement facility from liability for personal injury or death of patron, 54 ALR5th 513. Illegality as basis for denying remedy of specific performance for breach of contract, 58 ALR5th 387. Who is ‘‘automobile manufacturer’’ for purposes of the Automobile Dealers Day in Court Act (15 USCS secs. 1221 et seq.), 51 ALR Fed. 812. Vertical restraints on sales territory or location as violative of § 1 of Sherman Act (15 USC § 1) - post-GTE Sylvania cases, 92 ALR Fed. 436.