Under North Carolina law, you typically cannot get attorney fees for breach of contract. However, there are a few circumstances where that isn’t the case.
The Law
By default, no causes of action in North Carolina come with attorney fees unless there’s a statutory basis. For example, our legislature decided that consumers deserve attorney fees if they’re successful in a fair debt collection case. Therefore, more consumers will file these complaints and obtain protection against bad actors.
Generally, the only causes of action that come with attorney fees are those that protect consumers. Our state has decided that businesses generally get to negotiate their own terms. Whether or not that’s fair doesn’t matter. For example, subcontractors have way less bargaining power than general contractors. With that imbalance, I see one-sided contracts benefiting the GCs. Because they’re businesses, there aren’t many statutory protections in place. Therefore, those subcontractors have to choose between bad terms or no work.
Reciprocal
The number one way to get court costs and attorney fees included in your contract is through a reciprocal attorney fee clause. Basically one of these states that whoever loses pays the winner’s lawyers. Because it is reciprocal, our state has decided that’s fair and enforceable.
Collections
There are lots of ways to breach a contract, but a special way is by not paying. Because of its uniqueness, our legislative body decided that you can collect some lawyer fees if your customer doesn’t pay. However, these collection costs are capped at 15% of the outstanding amount. Additionally, courts generally won’t uphold these fees unless it is clearly spelled out in the contract. You can’t just say your customer pays for all fees associated with collections. You need to specify attorney fees are included. It’s even better if you say they have to be reasonable or capped at 15% of the outstanding balance.
Special Circumstances
Ordinary breach of contract is outlined above, but what about if someone does something terrible? In some special cases, like fraud, you can get attorney fees without having to include them in your contract.
You can also get lawyer fees for certain unique types of contracts like certain loans. Additionally, any types of contracts that include liens. For example, a cabinet installer can put a lien on your house if you don’t pay. When they go to collect, you have to pay their lawyer.
Attorney Fees
In conclusion, attorney fees are actually not all that common in breach of contract cases. You need to specify reciprocal or reasonable fees in collections, or you’ll need a special circumstance. Fraud and similar special circumstances are also very hard to prove. Judges prefer to assume someone is incompetent over committing a fraud. That’s probably for the best.
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