71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 2255
A-Engrossed
House Bill 2414
Ordered by the House April 12
Including House Amendments dated April 12
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of Representative Lane
Shetterly for Oregon Law Commission)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
Establishes rules governing conflict of laws in contracts.
A BILL FOR AN ACT
Relating to conflict of laws.
Be It Enacted by the People of the State of Oregon:
{ +
DEFINITIONS + }
SECTION 1. { + Definitions. For the purposes of sections 1 to
10 of this 2001 Act:
(1) 'Law' means any rule of general legal applicability adopted
by a state, whether that rule is domestic or foreign and whether
derived from international law, a constitution, statute, other
publicly adopted measure or published judicial precedent. Except
for references to the law of Oregon, 'law' does not include rules
governing choice of law.
(2) 'State' means the United States, any state of the United
States, any territory, possession or other jurisdiction of the
United States, any Indian tribe, other Native American group or
Native Hawaiian group that is recognized by federal law or
formally acknowledged by a state of the United States, and any
foreign country, including any territorial subdivision or other
entity with its own system of laws. + }
{ +
APPLICABILITY + }
SECTION 2. { + Applicability. Sections 1 to 10 of this 2001
Act govern the choice of law applicable to any contract, or part
of a contract, when a choice between the laws of different states
is at issue. Sections 1 to 10 of this 2001 Act do not apply if
another Oregon statute expressly designates the law applicable to
the contract or part of a contract. Sections 1 to 10 of this 2001
Act do not apply to any contract in which one of the parties is a
financial institution, as defined by 15 U.S.C. 6827, as in effect
on the effective date of this 2001 Act. + }
{ +
CONTRACTS GOVERNED BY OREGON LAW + }
SECTION 3. { + Specific types of contracts governed by Oregon
law. Notwithstanding any other provision of sections 1 to 10 of
this 2001 Act, but subject to the limitations on applicability
imposed by section 2 of this 2001 Act, the law of Oregon applies
to the following contracts:
(1) A contract for services to be rendered in Oregon, or for
goods to be delivered in Oregon, if Oregon or any of its agencies
or subdivisions is a party to the contract. The application of
Oregon's law pursuant to this subsection may be waived by a
person authorized by Oregon's law to make the waiver.
(2) A contract for construction work to be performed primarily
in Oregon.
(3) A contract of employment for services to be rendered
primarily in Oregon by a resident of Oregon.
(4)(a) A consumer contract, if:
(A) The consumer is a resident of Oregon at the time of
contracting; and
(B) The consumer's assent to the contract is obtained in
Oregon, or the consumer is induced to enter into the contract in
substantial measure by an invitation or advertisement in Oregon.
(b) For the purposes of this subsection, a consumer contract is
a contract for the supply of goods or services that are designed
primarily for personal, familial or household use. + }
{ +
RULES GOVERNING FORM OF CONTRACT, + }
{ +
CAPACITY TO CONTRACT AND CONSENT + }
SECTION 4. { + Validity of form. A contract is valid as to
form if the contract meets the requirements prescribed either by
the law chosen by the parties under sections 7 and 8 of this 2001
Act, the law applicable under section 3, 9 or 10 of this 2001
Act, or the law of the state from which any party or the party's
agent has assented to the contract unless that state has no other
connection to the parties or the transaction. + }
SECTION 5. { + Capacity to contract. (1) A party has the
capacity to enter into a contract if the party has that capacity
under the law of the state in which the party resides or the law
applicable to this issue under section 3, 9 or 10 of this 2001
Act.
(2) A party that lacks capacity to enter into a contract under
the law of the state in which the party resides may assert that
incapacity against a party that knew or should have known of the
incapacity at the time the parties entered into the contract. If
a party establishes lack of capacity in the manner provided by
this subsection, the consequences of the party's incapacity are
governed by the law of the state in which the incapable party
resides. + }
SECTION 6. { + Consent. (1) A party has consented to a
contract if the law applicable under section 3, 9 or 10 of this
2001 Act so provides.
(2) In a consumer contract or employment contract, the consumer
or employee whose assent to a contract was obtained in the state
of the party's residence, or whose conduct leading to the
contract was primarily confined to that state, may invoke the law
of that state to establish that the party did not consent to the
contract or that the consent was not valid by reason of fraud or
duress. + }
{ +
CHOICE OF LAW MADE BY PARTIES + }
SECTION 7. { + Choice of law made by parties. (1) Except as
specifically provided by section 3, 4, 5, 6 or 8 of this 2001
Act, the contractual rights and duties of the parties are
governed by the law or laws that the parties have chosen. The
choice of law may extend to the entire contract or to part of a
contract.
(2) The choice of law must be express or clearly demonstrated
from the terms of the contract. In a standard-form contract
drafted primarily by only one of the parties, any choice of law
must be express and conspicuous.
(3) The choice of law may be made or modified after the parties
enter into the contract. Any choice of law made or modified after
the parties enter into the contract must be by express agreement.
(4) Unless the parties provide otherwise, a choice of law or
modification of that choice operates retrospectively to the time
the parties entered into the contract. Retrospective operation
under the provisions of this subsection may not prejudice the
rights of third parties. + }
SECTION 8. { + Limitations on a choice of law by the parties.
(1) The law chosen by the parties pursuant to section 7 of this
2001 Act does not apply to the extent that its application would:
(a) Require a party to perform an act prohibited by the law of
the state where the act is to be performed under the contract;
(b) Prohibit a party from performing an act required by the law
of the state where it is to be performed under the contract; or
(c) Contravene an established fundamental policy embodied in
the law that would otherwise govern the issue in dispute under
section 9 of this 2001 Act.
(2) For purposes of subsection (1)(c) of this section, an
established policy is fundamental only if the policy reflects
objectives or gives effect to essential public or societal
institutions beyond the allocation of rights and obligations of
parties to a contract at issue. + }
{ +
LAW APPLICABLE IN THE ABSENCE + }
{ +
OF AN EFFECTIVE CHOICE BY THE PARTIES + }
SECTION 9. { + General rule. To the extent that an effective
choice of law has not been made by the parties pursuant to
section 7 or 8 of this 2001 Act, or is not prescribed by section
3, 4, 5, 6 or 10 of this 2001 Act, the rights and duties of the
parties with regard to an issue in a contract are governed by the
law, in light of the multistate elements of the contract, that is
the most appropriate for a resolution of that issue. The most
appropriate law is determined by:
(1) Identifying the states that have a relevant connection with
the transaction or the parties, such as the place of negotiation,
making, performance or subject matter of the contract, or the
domicile, habitual residence or pertinent place of business of a
party;
(2) Identifying the policies underlying any apparently
conflicting laws of these states that are relevant to the issue;
and
(3) Evaluating the relative strength and pertinence of these
policies in:
(a) Meeting the needs and giving effect to the policies of the
interstate and international systems; and
(b) Facilitating the planning of transactions, protecting a
party from undue imposition by another party, giving effect to
justified expectations of the parties concerning which state's
law applies to the issue and minimizing adverse effects on strong
legal policies of other states. + }
{ +
PRESUMPTIVE RULES + }
SECTION 10. { + Presumptive rules for specific types of
contracts. (1) To the extent that an effective choice of law has
not been made by the parties pursuant to section 7 or 8 of this
2001 Act, or is not prescribed by section 3, 4, 5 or 6 of this
2001 Act, contracts described in subsection (2) of this section
are governed by the law of the state specified in subsection (2)
of this section unless a party demonstrates that the application
of that law would be clearly inappropriate under the principles
of section 9 of this 2001 Act.
(2)(a) Contracts involving the occupancy of real property, the
land use of property or the recording of interests in real
property are governed by the law of the state where the property
is situated.
(b) Contracts for personal services are governed by the law of
the state where the services are to be primarily rendered
pursuant to the contract.
(c) Contracts for franchises, as defined in ORS 650.005, except
for licensing clauses in such contracts, are governed by the law
of the state where the franchise is to operate pursuant to the
contract.
(d) Licensing contracts and licensing clauses in contracts for
franchises, as defined in ORS 650.005, are governed by the law of
the state where the licensor has its place of business or
residence with the closest connection to the transactions between
the parties. For purposes of this subsection, 'licensing' means a
grant of a privilege, created by contract, that allows one party,
the licensee, to use the property or right of another party, the
licensor.
(e) Agency contracts are governed by the law of the state where
the agent's duties are to be primarily performed. + }
{ +
MISCELLANEOUS + }
SECTION 11. { + (1) Except as provided in subsection (2) of
this section, sections 1 to 10 of this 2001 Act apply to all
contracts, whether entered into before, on or after the effective
date of this 2001 Act, unless that application would violate
constitutional prohibitions against impairment of contracts.
(2) Sections 1 to 10 of this 2001 Act do not apply to any
choice of law that is at issue in an action or proceeding
commenced before the effective date of this 2001 Act. + }
SECTION 12. { + The unit and section captions used in this
2001 Act are provided only for the convenience of the reader and
do not become part of the statutory law of this state or express
any legislative intent in the enactment of this 2001 Act. + }
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