Until recently in North Carolina, a party that sued another for failure to abide by the terms of a contract was unlikely to recoup the attorney fees that were paid in the process of trying to make things right, even if the contract stated that such should be paid. Often, the cost of trying to sue was too great to justify trying to make the other person do what was promised.
Last year, a new law was passed that makes provisions in contracts for the award of certain attorney fees valid and enforceable. There are, however, a few limitations to the new law.
1) The contract has to be a business contract - a contract entered into primarily for business or commercial purposes. The law excludes contracts where one party is a consumer (one or more individuals enters into the contract primarily for personal, family, or household purposes), employment contracts, and contracts where one party is the government or a governmental agency;
2) The language in the contract that allows for the award of attorney fees has to apply to all parties. In other words, each party to the contract has to have the same right to claim attorney fees for any suit, action, proceeding, or arbitration involving the business contract;
3) The provisions allowing for attorney fees are only valid and enforceable if ALL parties to the business contract sign by hand; and
4) The award of attorney fees cannot exceed the monetary damages that are awarded because of a failure to fulfill the contractual obligations.
5) This only applies to contracts executed on or after OCTOBER 1, 2011.
In determining the amount of attorney fees to be awarded, the Court or arbitrator will take into consideration a number of factors, including the following:
1) The terms of the business contract;
2) The amount of attorney fees awarded in similar cases;
3) The amount in controversy and the results obtained in the cause of action;
4) The reasonableness of the time spent and rate charged by the attorney or attorneys;
5) The difficulty of the issues involved and the skill required of the attorney or attorneys involved;
6) The economic circumstances of the parties involved;
7) The sophistication of the parties involved; and
8) Settlement offers that were made prior to legal proceedings being started.
Before you or your company enters into a business contract, you should contact Sanders Law Firm. We can make sure that you are protected in terms of your contract and in terms of what happens if someone else fails to keep their end of the bargain. There are other statutes that may allow for the award of attorney fees if someone has done you wrong. If you have been hurt by someone failing to follow through on what was promised, call us today.
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