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“ATTORNEY FEES PROVISION”-A CRUCIAL CLAUSE TO HAVE IN YOUR COMMERCIAL CONTRACTS

Posted by Aric S. Bomsztyk | Dec 20, 2018 | 0 Comments

Litigation is expensive.  In Washington, every side in litigation must pay for their own attorney fees unless The general rule in Washington, commonly referred to as the “American Rule” , is that each party in a civil action will pay its own attorney fees and costs. In re Impoundment of Chevrolet Truck, 148 Wash.2d 145, 160, 60 P.3d 53 (2002); Mellor v. Chamberlin, 100 Wash.2d 643, 649, 673 P.2d 610 (1983).

This “American Rule” can be altered by contract, statute or a few selected other grounds.  However, in the case of business disputes and litigation, however, there are very few statutes or other grounds where a business can recover its attorney fees for bringing a lawsuit or defending against a lawsuit.  Thus, Washington businesses need to have contracts that contain an “attorney fees provision” where the losing party in litigation must pay the winning party's attorneys fees and legal costs.  If a business does not have this clause, they could end up paying thousands of dollars in attorney fees even if they “win” a lawsuit. 

To protect your business in event of litigation, and save thousands of dollars, all your contracts should contain this crucial “attorney fees provision.”  Some examples of attorney fees provisions are below:

----"In the event of any dispute over, relating or referring to this agreement, including but not limited to collections actions, breach of contract/agreement actions, declaratory judgment actions or equitable injunction actions the predominantly prevailing party will be entitled to its reasonable legal costs, expert fees, and attorneys' fees.”

---- If either party brings an action to enforce their rights under this contract, the prevailing party shall recover its expenses (including reasonable attorneys' fees) incurred in said action, including any appeals.   

---- In any litigation, arbitration, or other proceeding by which one party either seeks to enforce this contract (regardless of the nature of the claim) or seeks a declaration of any rights or obligations under this contract, the prevailing party shall be awarded its reasonable attorney fees, and costs and expenses incurred.

---- In the event of any dispute between the parties concerning the terms and provisions of this agreement, or the relationship between them, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys fees.

Ensuring all your business contracts have an attorneys fees provisions means that you will be better protected from frivolous lawsuits because the other side will have to pay your attorney fees and legal costs when you successfully defend against a lawsuit.  Clauses like these will also make ensuring your rights easier and more cost effective because the other side will have to pay your attorney fees and legal costs when you win.

Our firm represents companies in drafting, reviewing and advising on commercial contracts of all types.  This includes operating agreements, commercial leases, noncompetition agreements, independent contractor agreements, purchase and sale agreements, and exclusive vendor agreements. Please contact our firm with any questions, we will provide a free consultation.

About the Author

Aric S. Bomsztyk

Partner - Mr. Bomsztyks practice encompasses all aspects of small business representation including incorporation, financing, contract/lease review, negotiations, dispute resolution, and litigation. Mr. Bomsztyk represents a wide variety of business including internet startups, general con...

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