- 31 -
decedent’s bargain sale of his shares breached a fiduciary duty
to the ESOP or its participants is unavailing, and we decline to
find the 1996 Agreement invalid on this basis.
Nor do we find the 1996 Agreement to be a novation of the
1981 Agreement. To qualify as a novation, a contract must meet
four requirements. There must be: (i) A previous valid
contract; (ii) the parties’ agreement to a new contract; (iii)
the extinguishment of the old contract; and (iv) a valid new
contract. Savannah Bank & Trust Co. v. Wolff, 11 S.E.2d 766, 772
(Ga. 1940). Here, the key question is whether the 1996 Agreement
extinguished the 1981 Agreement. To satisfy this element, either
a mutual intent to create a novation must be shown, Mayer v.
Turner, 234 S.E.2d 853 (Ga. Ct. App. 1977), or the later
inconsistent agreement must be one that “completely cover[s] the
subject matter” of the prior agreement, Powell v. Norman Elec.
Galaxy, Inc., 493 S.E.2d 205, 207 (Ga. Ct. App. 1997). We
consider each of these possibilities in turn.
Respondent argues that the 1996 Agreement’s lack of any
express intent to modify the 1981 Agreement requires an inference
that decedent intended to extinguish the 1981 Agreement by
entering into the 1996 Agreement. We disagree. First, we are
unaware of any rule requiring that a modification to a contract
explicitly indicate it is intended as such. Second, that some
Page: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 NextLast modified: May 25, 2011