Attorney Fee Awards in North Carolina Business Contracts and Collection Cases

January 16, 2013

Although the American legal system generally requires that parties bear their own costs, including attorney fees, North Carolina does provide the ability for a court to include attorney fees as part of a judgment in certain situations.  Some of these situations include construction contracts relating to contractor and subcontractor lien statutes, unfair and deceptive trade practices claims, trade secret claims, and in certain personal injury and insurance coverage suits.  North Carolina also has some laws protecting parties enforcing contractual rights in a breach of contract lawsuit, including a new statute relating to business contracts.  To discuss any of the above claims with experienced civil business litigation and personal injury attorneys, contact Maginnis Law at 919.526.0450 or submit a confidential new case inquiry here.

North Carolina General Statute 6.21-2 allows for attorney fees to be awarded if there is an attorney fee provision in promissory notes, sales contracts or other evidence of indebtedness.  “Evidence of indebtedness” has generally been interpreted loosely, though there are some limitations. Recovery is capped at 15% of the balance due and owing, unless a contract awards less than 15%.  Significantly, attorney fees in collections cases are one of the few statutes where there is limited discretion for the Court in awarding the fees, so long as the notice provisions required by the statute are met.

North Carolina General Statute 6-21.6 was recently instituted to allow for the award of attorney fees in reciprocal business contracts.  Here, there is no 15% limitation, but the award is at the discretion of the trial judge. The attorney fee must be reciprocal, in that either side is eligible to recover the attorney fee.  There are certainly also cases in which either of these statutes could apply and a party could potentially choose between the more favorable statute.

Maginnis Law, PLLC is a Raleigh civil litigation firm with business law attorneys handling breach of contract disputes, collection matters and other business litigation matters.  The firm handles cases throughout Wake County and the Research Triangle area, including Cary, Apex, Wake Forest, Durham, Youngsville, Holly Springs and others. The firm handles select cases throughout North Carolina.  Contact the firm at 919.526.0450 for a free consultation regarding or your matter or submit a confidential new case inquiry  here.

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