The Concept of the Administrative Contract and the Authority to Conclude It
An administrative contract is the instrument by which an administrative-legal relationship may arise, change or be terminated through agreement between an administrative organ and the other party. Under the General Administrative Code of Georgia, unless the law provides otherwise, the origin, modification or termination of an administrative-legal relationship is possible through the conclusion of an administrative contract. This means that the organ has a genuine choice: to regulate a matter by a unilateral decision or by an agreed form of cooperation with the other party. In practice this often creates a more flexible and cooperative model of interaction between the organ and a citizen or a business.
The boundary of authority is clearly drawn: an administrative organ is entitled to regulate, by concluding an administrative contract, a specific administrative-legal relationship which it is competent by law to regulate through the issuance of an individual administrative-legal act. In other words, the power to conclude the contract is subject to exactly the same limits as the organ's power to issue an act — the organ cannot create more by contract than it could by issuing an administrative act under the law.
When an administrative organ concludes an administrative contract, the norms of this Code apply together with the additional requirements for contracts provided for by the Civil Code of Georgia. The Code here says plainly that it defers to the Civil Code: the administrative contract is a legally hybrid institution in which the specificity of public law and the general rules of civil contract law operate side by side.
Special Requirements for the Contract
In concluding an administrative contract the administrative organ acts only within the limits of the powers conferred on it by law. This requirement restates the principle of competence: the contractual form does not confer on the organ any authority that it does not possess by law, and an organ cannot use a contract to extend its own competence.
An administrative contract concluded by an administrative organ must not contradict the Constitution of Georgia or the legislation. Moreover, it is inadmissible for an administrative contract to violate the human rights and freedoms established by the Constitution of Georgia. This means that even by mutual agreement of the parties, a contract cannot restrict rights that fall within the sphere of constitutional protection — the fact of agreement cannot overcome a constitutional limit. Violation of these requirements directly endangers the reliability of the contract.
The Consent of the Third Party and of Another Administrative Organ
A contract that restricts the rights of a third party or imposes any obligation on that party may enter into force only after the third party has submitted written consent. This rule protects persons who are not parties to the contract but whose position is determined by its content: their rights cannot be restricted without their own written consent.
A special rule applies where the contract is concluded instead of issuing an administrative act: such a contract enters into force after the written consent of the administrative organ that is necessary, in accordance with legislation, for the issuance of the corresponding act. In other words, if legislation required the consent of another organ for issuing the act, the same consent is required for the contract — the contractual form cannot become a way of bypassing a consent that legislation provides for the act.
The Form of the Contract and Its Nullity
Unless the law provides otherwise, an administrative contract may be concluded only in written form. The written form ensures a precise fixation of the content agreed between the parties and subsequently performs the function of evidence: when the content or the very existence of the contract becomes disputed, the document itself is the source on which reliance may be placed. The law admits another form only in an exceptional case, where this is directly provided for.
The declaration of nullity of a contract concluded by an administrative organ is governed by the Civil Code of Georgia. The Code again says plainly that this matter is determined by civil law: the grounds, the procedure and the consequences of nullity must be determined by the corresponding norms of the Civil Code, and not by administrative legislation. When the question of a contract's nullity arises, reliance should therefore be placed precisely on the Civil Code or on professional advice.
Amendment and Termination of the Contract
Where circumstances change substantially, to the detriment of a party or of the public interest, the party is entitled to demand from the other party consent to amend the administrative contract. This means that amendment proceeds through agreement: one party requests the amendment, and the other decides whether to consent. The ground for such a demand must be a substantial change of circumstances, and the detriment must affect either a party or the public interest.
If an amendment to the contract would substantially contradict the content of the contract, the party is entitled to demand the cancellation of the contract. The practical logic is the following: the possibility of amendment is examined first, and only where the amendment cannot be reconciled with the essence of the contract does the demand for its cancellation become available. This approach protects the stability of the contract and encourages the parties to try the path of agreed amendment first.