American Rule

AAA

DEFINITION of 'American Rule'

A rule in law and economics that says attorney fees should be paid by each party involved in litigation - even the party that wins the case. An exception to the American rule can occur when the court awards the winning party compensation to cover fees against a losing party that has acted in bad faith.


INVESTOPEDIA EXPLAINS 'American Rule'

The American Rule contrasts with the English Rule, in which the losing party pays the fees for the winning party. Most countries outside the U.S. operate under the English rule. Some people argue that the American Rule allows plaintiffs to threaten other parties with expensive lawsuits in order to get a favorable settlement.


RELATED TERMS
  1. Confession Of Judgment

    A written agreement signed by the defendant that accepts the ...
  2. Judgment

    A court order to the loser of a lawsuit to pay the winner a specified ...
  3. Tax Court

    A specialized court of law that hears and adjudicates tax-related ...
  4. Writ

    A legal document written by a judge or other body with administrative ...
  5. Appraised Equity Capital

    The excess of the market value of an asset over its book value. ...
  6. Asset Liquidation Agreement (ALA)

    A contract between the Federal Deposit Insurance Corporation ...
Related Articles
  1. Are You Trying To Get Sued?!
    Insurance

    Are You Trying To Get Sued?!

  2. Is Your Broker Ripping You Off?
    Brokers

    Is Your Broker Ripping You Off?

  3. Litigation: Are Your Investments At ...
    Personal Finance

    Litigation: Are Your Investments At ...

  4. So, You Want To Take Your Broker To ...
    Options & Futures

    So, You Want To Take Your Broker To ...

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center