Business Law in Georgia

Business law, a term without precise technical definition, encompasses in common usage a vast array of constitutional, legal, and administrative regulations of commercial activity in allits forms and includes a wide variety of both federal and state legislative and administrative prescriptions. Understood in this broad fashion, business law has been a feature of Georgia commercial life at all periods in the history of the colony and state.

Early Regulations

Business regulations have been familiar in Georgia since the colonial era when, during the Trusteeship period (1732-52), Georgia's governmental authorities enacted restrictions on a number of commercial and professional activities, including prohibitions against trade in slaves, the sale of rum and other alcoholic beverages, and professional activity by lawyers. Land-use regulations and restrictions adopted during this period were, in fact, "business laws" designed to foster the commercial objectives of the colony. The American Revolution (1775-83) in Georgia was fueled in substantial part by tensions between the royal government under James Wright and the colonial assembly and its leaders—Noble W. Jones, Edward Telfair, and Archibald Bulloch, among others—over mercantile and business tax policies.

Nineteenth-Century Legislation

Consistent with the laissez-faire economic policy of the age, direct legal regulation of business in Georgia prior to the middle of the nineteenth century was erratic and infrequent, although laws encouraging the development of the state's transportation and communication infrastructure (especially roads and canals), as well as such enterprises as gold mining, shipping, municipal street rail companies, and others, were not uncommon. However, Georgia registered a significant milestone in American legal history when, in 1863, it became the first American jurisdiction to codify its general common law, including that of contract, which is the body of substantive law perhaps most directly related to the core of business transactions. Much of this mid-nineteenth-century code, drafted in substantial part by Thomas R. R. Cobb of Athens, remains intact and in force even today.

Twentieth-Century Lawmaking

With the increased industrialization of Georgia's economy and the urbanization of its population in the late nineteenth and early twentieth centuries, the pace and scope of governmental regulation of business increased significantly, particularly with respect to public utilities and the banking and insurance industries. The employer-employee relationship too became the focus of specific state regulation, an example of which is a 1906 child labor law in Georgia prohibiting the employment in factories of persons ten years old or younger. In 1920 Georgia adopted its first comprehensive workers' compensation program, much of which remains substantially in effect today. The Wall Street crash of 1929 reverberated nearly three decades later in Georgia with the 1957 adoption of the Georgia Securities Act, which, among other provisions, severely limits the sale of securities, defined by the law to include virtually all intangible ownership interests in a business.
In modern Georgia, a variety of business laws exist to ensure the general welfare of those involved in commercial activity. An expansive understanding of police power—the authority of the state to regulate matters touching on the health, safety, and welfare of its citizens—led to the enactment of comprehensive business laws regulating such diverse aspects of commercial enterprises as carnival and amusement ride safety, the regulation of boilers and pressure vessels, professional activities requiring state licenses, brokerage relationships in real estate transactions, commodities and commodity contracts and options, the activities of warehousemen, telemarketing, cemetery and funeral services, and many others. In addition to the regulation of these specific sectors or forms of business activity, Georgia has also undertaken a variety of statutory initiatives to improve the general conditions of business employment in the state, including the prohibition of sex discrimination in employment, the guarantee of minimum wages, limitations on hours of labor in factories, legal provisions touching on labor organizations and labor relations, guarantees for the equal employment for persons with disabilities, and provisions aimed at guaranteeing employment security.
Georgia has remained abreast of legal reform in the field of commercial contracts, as evidenced by its enactment of the Uniform Commercial Code in 1962, a comprehensive regulatory structure that controls significant aspects of sales, the use of such commercial paper as promissory notes and bank drafts, and transactions where payment of all or part of the purchase price of goods is secured by liens on personal property. Today's expansive understanding of the power of Congress to regulate under the Interstate Commerce Clause of the U.S. Constitution, coupled with the authority of the state to protect public health, safety, and welfare under its police power, now makes it a safe assumption that virtually any activity for profit in Georgia falls within the parameters of constitutional business regulation by state or federal governments.

Corporate Law

In tandem with the consolidation and specialization of substantive business law principles, modern Georgia law has also elaborated in statutory form the variety of permissible forms in which business can be conducted with sanction of law. Sole proprietorships and general partnerships, very popular in the nineteenth and early twentieth centuries, gave way to the general business corporation by the middle of the latter century, and the attractiveness of the corporate form for doing business has been assured in Georgia by the adoption of the nationally acclaimed Model Business Corporation Code. These business forms now coexist in Georgia law with the limited partnership, which permits limited personal liability for passive investors in the business enterprise, unlike the older general partnership.
Since 1970 the professional corporation has been available in Georgia to facilitate for-profit activity. This model offers the flexibility of the general partnership while capturing some benefits of the corporate form. The professional association—analytically a specialized kind of unincorporated association—also offers such advantages, but its use is restricted by law, as is the professional corporation, to such licensed professionals as attorneys, certified public accountants, chiropractors, dentists, osteopaths, physicians and surgeons, and podiatrists. Limited Liability Companies (LLCs), first appearing in Georgia law in 1993, allow participants to govern themselves much as a partnership while enjoying limited liability for both active parties and passive investors.


While business and commercial interests in Georgia have impacted both the substance and form of business law in the state, they have also found expression in the procedural means for the resolution of business disputes. As early as the end of the eighteenth century, the Georgia legislature made provisions for the resolution of business disputes by arbitration and, by the middle of the next century, Georgia had in place its first arbitration code, which permitted nonjudicial resolutions to business disagreements. A general arbitration code for construction disputes was in place by 1978, and a decade later in 1988, the state offered a general arbitration code designed for the efficient, out-of-court resolution of both domestic and international commercial disputes. These arbitration laws, from Georgia's earliest days until the present moment, have proven themselves especially popular in the state's business community as a means of preserving commercial relationships, definitively ending commercial disagreements, and reducing the costs associated with court litigation.


Cite This Article
Lanier, E. R.. "Business Law in Georgia." New Georgia Encyclopedia. 26 August 2013. Web. 28 July 2021.
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