What is the test for an attorney's fees clause in a "adhesion" contract?
California, United States of America
The following excerpt is from Covenant Mutual Ins. Co. v. Young, 179 Cal.App.3d 318, 225 Cal.Rptr. 861 (Cal. App. 1986):
"It is common knowledge that parties with superior bargaining power, especially in 'adhesion' type contracts, customarily include attorney fee clauses for their own benefit. This places the other contracting party at a distinct disadvantage. Should he lose in litigation, he must pay legal expenses of both sides, and even if he wins, he must bear his own attorney's fees. One-sided attorney's fees clauses can thus be used as instruments of oppression to force settlements or unmeritorious claims. [Citations omitted.] Section 1717 was obviously designed to remedy this evil." (Coast Bank v. Holmes (1971) 19 Cal.App.3d 581, 596-597, 97 Cal.Rptr. 30.)
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