A California real estate agent drafts a purchase agreement that includes a clause stating: 'In the event of a dispute, the prevailing party shall be entitled to reasonable attorney's fees.' The agent is later asked whether this clause is standard in California residential real estate transactions. Under California law, what is the MOST accurate response?
Correct Answer
A) If a contract includes an attorney's fees clause, California Civil Code §1717 makes it reciprocal, allowing either party to recover fees if they prevail
Under California Civil Code §1717, when a contract contains an attorney's fees provision, it is deemed reciprocal by operation of law. This means that even if the clause is drafted to benefit only one party, the prevailing party in any contract dispute is entitled to reasonable attorney's fees. The CAR RPA includes such a provision.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
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