---
title: Ga. Const. Art. III, Sec. VI, Para. V. Specific limitations.
collection: code
id: ga-const:art-iii-sec-vi-para-v
cite_as: Ga. Const. Art. III, Sec. VI, Para. V
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---

# Ga. Const. Art. III, Sec. VI, Para. V. Specific limitations.

A constitution provision shown as in force is in force as printed in the volume. A court decision can make a printed provision unenforceable without changing the volume, and the volume does not record that.

(a) The General Assembly shall not have the power to grant incorporation to private persons but shall provide by general law the manner in which private corporate powers and privileges may be granted.

(b) The General Assembly shall not forgive the forfeiture of the charter of any corporation existing on August 13, 1945, nor shall it grant any benefit to or permit any amendment to the charter of any corporation except upon the condition that the acceptance thereof shall operate as a novation of the charter and that such corporation shall thereafter hold its charter subject to the provisions of this Constitution.

(c)(1) The General Assembly shall not have the power to authorize any contract or agreement which may have the effect of or which is intended to have the effect of encouraging a monopoly, which is hereby declared to be unlawful and void. Except as otherwise provided in subparagraph (c)(2) of this Paragraph, the General Assembly shall not have the power to authorize any contract or agreement which may have the effect of or which is intended to have the effect of defeating or lessening competition, which is hereby declared to be unlawful and void.

(2) The General Assembly shall have the power to authorize and provide by general law for judicial enforcement of contracts or agreements restricting or regulating competitive activities between or among:

(A) Employers and employees;

(B) Distributors and manufacturers;

(C) Lessors and lessees;

(D) Partnerships and partners;

(E) Franchisors and franchisees;

(F) Sellers and purchasers of a business or commercial enterprise; or

(G) Two or more employers.

(3) The authority granted to the General Assembly in subparagraph (c)(2) of this Paragraph shall include the authority to grant to courts by general law the power to limit the duration, geographic area, and scope of prohibited activities provided in a contract or agreement restricting or regulating competitive activities to render such contract or agreement reasonable under the circumstances for which it was made.

(d) The General Assembly shall not have the power to regulate or fix charges of public utilities owned or operated by any county or municipality of this state, except as authorized by this Constitution.

(e) No municipal or county authority which is authorized to construct, improve, or maintain any road or street on behalf of, pursuant to a contract with, or through the use of taxes or other revenues of a county or municipal corporation shall be created by any local Act or pursuant to any general Act nor shall any law specifically relating to any such authority be amended unless the creation of such authority or the amendment of such law is conditioned upon the approval of a majority of the qualified voters of the county or municipal corporation affected voting in a referendum thereon. This subparagraph shall not apply to or affect any state authority. (Ga. Const. 1983, Art. 3, § 6, Para. 5; Ga. L. 1986, p. 1628, § 1/HR 662; Ga. L. 2010, p. 1260, § 1/HR 178.)

## Cross References

Impairment of contract obligations generally, U.S. Const., art. I, sec. X, cl. 1. Regulation of utilities generally, Ga. Const. 1983, Art. IV, Sec. I, Para. I. Establishment of just and reasonable rates, fares, and charges for transportation, § 40-1-118. Granting particular corporate powers: banks, § 7-1-395; insurance companies, § 33-14-5; express companies, § 46-9-230; canal companies, § 52-4-1; navigation companies, § 52-5-1. Illegal and void contracts generally, Ch. 8, T. 13. Corporations generally, T. 14. O.C.G.A. §§ 13-8-2; Art. 4 of Ch. 8 of T. 13. Inviola-bility of charters generally, §§ 14-2-1701, 14-3-1701. Forfeiture of corporate charters, § 14-4-160. Right of state to withdraw franchise when charter granted since January 1, 1863, § 14-5-3. Penalty for conspiring to restrain competition, § 16-10-22. Regulation of utility rates generally, § 46-2-23 et seq. Penalties for unjust discrimination by utilities, § 46-2-90 et seq. Regulation of rates charged by motor carriers, § 46-7-18. Regulation of rates charged by railroad companies, § 46-8-20. Street, suburban, and interurban railroads, § 46-8-330 et seq. Penalty for discrimination in rates and charges by carriers generally, § 46-9-250 et seq.

## Editor's Notes

The constitutional amendment (Ga. L. 1986, p. 1628, § 1) which added subparagraph (e) was approved by a majority of the qualified voters voting at the general election held on November 4, 1986.

The constitutional amendment (Ga. L. 1994, p. 2022, § 1) which would have authorized agreements among health care providers and other persons for the provision of health care services which may have had the effect of lessening competition if, according to criteria established by the General Assembly, the benefits to the public of such contracts or agreements outweighed the disadvantages of lessened competition was defeated at the general election on November 8, 1994.

The constitutional amendment (Ga. L. 2010, p. 1260, § 1), which rewrote subsection (c), was ratified at the general election held on November 2, 2010.

In light of the similarity of the provisions, decisions under former Ga. Const. 1976, Art. III, Sec. VIII, Para. IX and antecedent provisions, describing with specifity the power of the state to regulate public utilities, are included in the annotations for this paragraph. ent power to regulate public utilities, independent of this paragraph. Georgia Power Co. v. Allied Chem. Corp., 233 Ga. 558, 212 S.E.2d 628 (1975) (see Ga. Const. 1983, Art. III, Sec. VI, Para. V).

Paragraph not intended to limit

## Law Reviews

For article, ‘‘The General Practitioner and Antitrust 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 1976 constitutional amendment transferring authority to grant corporate powers and privileges from superior courts to the Secretary of State, and subsequent procedural changes, see 13 Ga. St. B.J. 91 (1976). For article discussing origin of state bar on anticompetitive combinations, see 15 Ga. St. B.J. 39 (1978). For article on enforceability of restrictive covenants in employment contracts, see 17 Ga. St. B.J. 110 (1981). For article, ‘‘Liabilities of the Former Officer or Director,’’ see 18 Ga. St. B.J. 150 (1982). For article, ‘‘The Underbrush Grows Deeper: Restrictive Covenants in Employment Agreements in Georgia,’’ see 21 Ga. St. B.J. 28 (1984). 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, ‘‘Restrictions on Post-Employment Competition by an Executive Under Georgia Law,’’ see 54 Mercer L. Rev. 1133 (2003). For annual survey on labor and employment law, see 64 Mercer L. Rev. 173 (2012).

For note, ‘‘Maintaining Trade Secrecy: The Significance of Water Services v. Tesco Chemicals’’ (410 F.2d 163 (5th Cir. 1969)), see 4 Ga. L. Rev. 541 (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 restrictions on the creation of public purpose corporations, see 8 Ga. L. Rev. 680 (1974).

For comment on Griffin v. Vandegriff, 205 Ga. 288, 53 S.E.2d 345 (1949), see 11 Ga. B.J. 491 (1949). For comment on Durham v. Stand-By Labor of Ga., Inc., 230 Ga. 558, 198 S.E.2d 145 (1973), see 8 Ga. L. Rev. 526 (1974).

## 1976 Constitution.

Art. III, Sec. VIII, Paras. V, VI, VIII-X.

## Standing.

In order to have standing to bring claims under Ga. Const. 1983, Art. III, Sec. VI, Para. V, or O.C.G.A. § 13-8-2(a)(2), 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).

## Creation of Municipal Electric Authority Constitutional.

As the Municipal Electric Authority is a public corporation of the state, the creation of the authority and the granting of powers to it do not constitute a grant of corporate SECRETS powers and privileges to a private company in violation of paragraph (a). Thompson v. Municipal Elec. Auth., 238 Ga. 19, 231 S.E.2d 720 (1976) (see Ga. Const. 1983, Art. III, Sec. VI, Para. V).

State Bar of Georgia is not private corporation under paragraph (a), but is an administrative arm of the court. Wallace v. Wallace, 225 Ga. 102, 166 S.E.2d 718, cert. denied, 396 U.S. 939, 90 S. Ct. 369, 24 L. Ed. 2d 240 (1969) (see Ga. Const. 1983, Art. III, Sec. VI, Para. V).

Object of paragraph (b) is to subject corporations to taxing power of the state, although exempted therefrom under their original charters, and the proviso was made for the purpose of encouraging the building of railroads. State v. Central of Ga. Ry., 109 Ga. 716, 35 S.E. 37, 48 L.R.A. 351 (1900) (see Ga. Const. 1983, Art. III, Sec. VI, Para. V).

Change of penalty during life of

## Charter.

Where the charter of a turnpike company granted in 1840 provided for a penalty for neglect of certain duties, the legislature could not change the pen-Grant of Corporate Powers (Cont’d) alty during the life of the charter. Habersham Tpk. Co. v. Taylor, 73 Ga. 552 (1884).

## 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 it by restrictive covenants. Godley Park Homeowners Ass’n v. Bowen, 286 Ga. App. 21, 649 S.E.2d 308 (2007). ing perpetual tax exemptions are not revocable by paragraph (b). Central of Ga. Ry. v. Wright, 248 U.S. 525, 39 S. Ct. 181, 63 L. Ed. 401 (1919) (see Ga. Const. 1983, Art. III, Sec. VI, Para. V).

The fact that contracts in special charters creating perpetual tax exemptions are not revocable by paragraph (b) applies to lessees of the original contracting company. Central of Ga. Ry. v. Wright, 250 U.S. 519, 40 S. Ct. 1, 63 L. Ed. 1123 (1919) (see Ga. Const. 1983, Art. III, Sec. VI, Para. V).

Contracts to Defeat Competition

1. In General

Paragraph (c) based on common

## Contracts in Special Charters Creatlaw.

Paragraph (c) is based on the common-law principle which invalidates contracts creating monopolies or defeating competition. Central R.R. v. Collins, 40 Ga. 582 (1869); State v. Central of Ga. Ry., 109 Ga. 716, 35 S.E. 37 (1900) (see Ga. Const. 1983, Art. III, Sec. VI, Para. V).

Contracts in restraint of trade void

## Generally.

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).

## 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).

Legal effect of restrictive covenant

## Determines Enforceability.

In carrying out the policy stated in subsection (c) of Ga. Const. 1983, Art. III, Sec. VI, Para. V, regarding defeating or lessening of competition, it is the legal effect of a restrictive covenant in a contract, not the parties’ specified manner of enforcement of the provision, that determines enforceability of a contract. Dougherty, McKinnon & Luby v. Greenwald, Denzik & Davis, 213 Ga. App. 891, 447 S.E.2d 94 (1994).

Paragraph (c) has same meaning as former Code 1933, § 20-504 (see now straint of trade and monopoly. Griffin v. Vandegriff, 205 Ga. 288, 53 S.E.2d 345 (1949), commented on in 11 Ga. B.J. 491 (1949) (see Ga. Const. 1983, Art. III, Sec. VI, Para. V).

Application of term ‘‘competition.’’ — The term ‘‘competition’’ is relative and dependent upon public benefits. State v. Central of Ga. Ry., 109 Ga. 716, 35 S.E. 37 (1900). solute bar against every kind of restrictive agreement. Howard Schultz & Assocs. v. Broniec, 239 Ga. 181, 236 S.E.2d 265 (1977), cert. denied, 445 U.S. 938, 100 S. Ct. 1332, 63 L. Ed. 2d 772 (1980); Adcock v. Speir Ins. Agency, Inc., 158 Ga. App. 317, 279 S.E.2d 759 (1981) (see Ga. Const. 1983, Art. III, Sec. VI, Para. V).

Restraints to be considered against

## O.c.g.a. § 13-8-2), Prohibiting re-Paragraph (c) Does Not Impose Abpublic Policy Background.

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).


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