Contracts And The Prevailing Party

Law Talk

Sam K. Abdulaziz
Attorney at Law

Sometimes in a trial, the contract may allow an award of attorney's fees to the prevailing party. Specifically,

"The party prevailing on the contract shall be the party who recovered a greater relief in the
action on the contract."

That means that if one party came out better than the other the court could award attorneys fees. The court may also determine that there was no prevailing party. Therefore, no attorneys fees to either party.

In a declaratory relief action, the court tries to determine the rights under the contract for each of the parties. It is a judgment that the court makes by giving their legal interpretation of the contract and state who would be entitled to what.

When one wins a case undeniably, by prevailing on, or defeating the claims of the other party, and there is an attorney's fees clause in the agreement, the successful party would be entitled to attorney's fees as a matter of right.

If neither party obtains a complete victory on all of the claims, the court, in its discretion, may determine which party prevailed on the contract, or whether neither party prevailed sufficiently to justify an award.

In one case, Silver Creek filed an action for declaratory relief (asking the court to determine the validity of a termination of the contract). Blackrock, on the other hand, argued that Silver Creek had breached its obligation to act reasonably in the attempt to terminate the agreement.

The case went to trial in the normal course of events and a judge heard testimony from both parties. The trial court found in favor of Silver Creek, but also noted that Blackrock was entitled to its deposit. Silver Creek took the case up on appeal stating that the court had abused its discretion. The Court of Appeal found that the record clearly showed that Silver Creek obtained the greater relief on the contract and prevailed. Therefore, they reversed the trial court's position and awarded all attorney's fees to Silver Creek.