This article revisits our recurring discussion of attorney’s fees, with a focus on attorney’s fees in contracts.
Does California Allow One-Way Attorney’s Fees in Contracts? The short answer is generally, “No.”
Pursuant to California Civil Code 1717 “In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.” (emphasis added).
In practice this means the party with the stronger bargaining power cannot create a “one-way” provision. Also this is a caution for many parties who are forming contracts in California but are unfamiliar with this provision.
What happens if a one-way provision is contained in a contract and the contract is executed? What determines the contract interpretation, the contract or the Statute? Probably no surprise here….Statute wins, and the Court will interpret and apply the contract in a manner consistent with California Public Policy as codified by CCC 1717.
There is a limited exception in 1717 “Where a contract provides for attorney’s fees, as set forth above,that provision shall be construed as applying to the entire contract, unless each party was represented by counsel in the negotiation and execution of the contract, and the fact of that representation is specified in the contract.”
About Adishian Law Group, P.C. Adishian Law Group, (www.AdishianLaw.com) is a California law firm with a statewide practice
in the areas of Corporate law, Employment law, Real Estate law, Arbitration/Mediation Services and Class Actions (selective). Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of December 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 7 States outside of California and 9 foreign countries—in over
370 legal matters.
For more information about this topic or to speak with Chris Adishian:
|310.726.0888 or 415.955.0888
|California Corporate Lawyer
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