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Monday, December 12, 2005

Contract Interpretation: "All Collection Costs"

Illinois_state_flag_1Does a contract provision allowing for “all collection costs” include attorneys’ fees? No, according to a recent Illinois appellate decision.

 Pursuant to a contract, a cleaning company performed services for an apartment building. When the building did not pay for the services, the cleaning company tried to collect. Eventually, after repeated collection efforts, the building paid for the services. However, the parties went to court over attorneys’ fees. The contract, which was prepared by the cleaning company, included a provision stating, “If the undersigned fails to pay for services rendered and collection efforts become necessary, the undersigned agrees to be responsible for all collection costs incurred.” (emphasis added).

The cleaning company argued that the contract provision allowing for “all collection costs” included attorneys’ fees. On the other hand, the building argued that the contract did not specifically provide a basis for awarding attorneys' fees. The court agreed with the building, holding that, because Illinois is an “American Rule” jurisdiction, the “all collection costs” provision was not sufficiently specific to encompass attorneys’ fees.

Negro Nest, LLC, v. Mid-Northern Management, Inc. (Dec. 1, 2005 Ill. App. 4 Dist.)

[Meredith R. Miller]

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