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Georgia Governor Signs New Restrictive Covenant Act

Posted in Practice & Procedure

Aimed at eliminating a potential issue regarding the effective date of the earlier statute and to fix certain drafting anomalies identified after previous passage, Georgia’s Restrictive Covenant Act  (version 2011), is now law, as the Governor signed the bill as passed by the House and Senate late this afternoon (May 11, 2011). 

The legislature made clear that the impetus for the re-enactment of the Restrictive Covenant Act was the potential issue regarding the effective date.  In Section 1 of the Act, the legislature wrote:

During the 2009 legislative session the General Assembly enacted HB 173 (Act No. 64, Ga. L. 2009, p. 231), which was a bill that dealt with the issue of restrictive covenants in contracts and which was contingently effective on the passage of a constitutional amendment. During the 2010 legislative session the General Assembly enacted HR 178 (Ga. L. 2010, p. 1260), the constitutional amendment necessary for the statutory language of HB 173 (Act No. 64, Ga. L. 2009, p. 231), and the voters ratified the constitutional amendment on November 2, 2010. It has been suggested by certain parties that because of the effective date provisions of HB 173 (Act No. 64, Ga. L. 2009, p. 231), there may be some question about the validity of that legislation. It is the intention of this Act to remove any such uncertainty by substantially reenacting the substantive provisions of HB 173 (Act No. 64, Ga. L. 2009, p. 231), but the enactment of this Act should not be taken as evidence of a legislative determination that HB 173 (Act No. 64, Ga. L. 2009, p. 231) was in fact invalid.

 

The primary substantive change to O.C.G.A. Section 13-8-56, which is now clarified to show that it applies both to in-term covenants and to post-term covenants.  No substantive changes were made to other sections in the statute as they were in the version passed by the General Assembly and signed by the Governor in 2009. 

The Governor’s signing should end a period of uncertainty since the enabling amendment was passed.  (For our previous post on that issue, see here.)