In Georgia, the statute of limitations for a breach of contract claim varies significantly depending on if the contract was signed "under seal."
Contracts in writing are generally subject to a 6-year statute of limitation under O.C.G.A. § 9-3-24. Thus, for most written contracts, six years from the date of the breach is the maximum time period that legal action may be instituted. In contrast, a contract signed "under seal" is subject to a 20-year statute of limitation under O.C.G.A. § 9-3-23.
A lawsuit filed after the statute of limitations has run is subject to summary dismissal.
Because the limitations period for a contract can vary significantly if it is signed under seal, there are important factors to understand. For example, what does it mean to sign a contract "under seal?" And, what are the technical requirements necessary for a contract to be signed "under seal?"
What is a contract "under seal?"
The term "under seal" refers to the use of a seal or stamp on the document to signify its importance and authenticity. Real estate and loan agreements, for example, are commonly signed "under seal" because they require a higher level of commitment by the parties.
For a document to be considered signed under seal, the following requirements must be met:
- A recital in the body of the instrument of an intention to use a seal; and
- The affixing of the seal or scroll after the signature.
Thus, contracts under seal must contain language to the effect of: "The parties have executed this Agreement under seal." And, a seal must be affixed by the parties' signatures, either by typing the word "SEAL" by the signature or impressing a corporate seal by the signature.
Courts strictly apply the requirements
Technical requirements are strict. For example, in Perkins v. M & M Office Holdings, LLC, the Georgia Court of Appeals held that an agreement was not signed under seal for certain parties.
The Court held it was not under seal even though "it contained a recital of an intention to use a seal, [because] the word 'Seal' did not appear by either party's signature and a seal was not otherwise affixed to the instrument."
By contrast, the court held subsequent amendments to the agreement were contracts under seal. The court stated "they contain the requisite recital and "SEAL" is printed by the parties' signatures."
Thus, the original agreement was time-barred by the six-year statute of limitation. It was barred even though the subsequent amendments were under seal and subject to a 20-year statute of limitation. The fact that the subsequent amendments were under seal did not place the original agreement under seal.
Takeaway
The 14-year difference between the statute of limitations for a regular contract and one under seal is significant.
When determining the statute of limitations for a breach of contract claim, it is critical to understand the requirements for a contract to be under seal. It is important for both plaintiffs and defendants to understand the applicable statute of limitations and take appropriate action to protect their rights. Failure to do so can have serious consequences and may result in the loss of important legal remedies.
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