Will Oregon apply the law the parties chose?
Generally yes. Except as ORS 15.320, 15.325, 15.330, 15.335 or 15.355 specifically provide, contractual rights and duties are governed by the law the parties have chosen; the choice must be express or clearly demonstrated from the terms, and in a standard-form contract drafted primarily by only one party it must be express and conspicuous (ORS 15.350(1)-(2)). The chosen law does not apply to the extent it would require an act prohibited, or prohibit an act required, by the law of the state where the act is to be performed, or contravene an established fundamental policy embodied in the law that would otherwise govern under 15.360; a policy is fundamental only if it reflects objectives or gives effect to essential public or societal institutions beyond the allocation of rights and obligations of the contracting parties (15.355). Notwithstanding the other provisions of 15.300 to 15.380, Oregon law applies to a contract for construction work to be performed primarily in Oregon, a contract of employment for services to be rendered primarily in Oregon by an Oregon resident, certain consumer contracts with Oregon residents, and certain contracts to which the State is a party (15.320); 15.320 does not apply to a contract in which one party is a financial institution, as defined by 15 U.S.C. 6827 as in effect on January 1, 2002, and 15.300 to 15.380 do not apply where another Oregon statute expressly designates the applicable law (15.305). Separately, a construction contract as defined in ORS 701.620 may not include a provision making it subject to the laws of another state, and such a provision is void and unenforceable (ORS 701.640), though ORS 701.620 to 701.640 do not reach a contract for a building subject to the Low-Rise Residential Dwelling Code, a public contract under ORS 279.835 to 279.855 or ORS chapter 279A, 279B or 279C, or housing in which all or part of the dwelling units are reserved for rental to persons at or below 80 percent of area median household income (701.645). Two further points: a choice of law may be made or modified after contracting, but any later choice or modification must be by express agreement (15.350(3)); and where no effective choice has been made and no provision prescribes one, the rights and duties of the parties on an issue are governed by the law, in light of the multistate elements of the contract, that is the most appropriate for resolving that issue (15.360).
The trap
For an Oregon construction job, an Oregon resident's employment primarily in Oregon, or a consumer contract meeting 15.320(4), Oregon law applies notwithstanding the clause (unless a party is a 15.305 financial institution). In a standard-form contract drafted primarily by one party, a choice that is not express and conspicuous does not meet 15.350(2). A choice-of-law change agreed later cannot be inferred from conduct at all: 15.350(3) requires an express agreement. The construction-contract bar in 701.640 is narrower than it looks, because 701.645 takes Low-Rise Residential Dwelling Code buildings, public contracts and the housing it describes outside ORS 701.620 to 701.640 altogether.
8 authorities
- statuteORS 15.350enactment date not established
The words that state the rule
Except as specifically provided by ORS 15.320, 15.325, 15.330, 15.335 or 15.355, 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.
- statuteORS 15.350enactment date not established
The words that state the rule
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.
- statuteORS 15.355enactment date not established
The words that state the rule
The law chosen by the parties pursuant to ORS 15.350 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 ORS 15.360. (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.
- statuteORS 15.320enactment date not established
The words that state the rule
Notwithstanding any other provision of ORS 15.300 to 15.380, but subject to the limitations on applicability imposed by ORS 15.305, 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.
- statuteORS 15.305enactment date not established
The words that state the rule
ORS 15.300 to 15.380 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. ORS 15.300 to 15.380 do not apply if another Oregon statute expressly designates the law applicable to the contract or part of a contract. ORS 15.320 does 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 January 1, 2002.
- statuteORS 15.360enactment date not established
The words that state the rule
To the extent that an effective choice of law has not been made by the parties pursuant to ORS 15.350 or 15.355, or is not prescribed by ORS 15.320, 15.325, 15.330, 15.335 or 15.380, 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.
- statuteORS 701.640enactment date not established
The words that state the rule
A construction contract may not include any provision, covenant or clause that: (a) Makes the construction contract subject to the laws of another state or that requires any litigation, arbitration or other dispute resolution proceeding arising from the construction contract to be conducted in another state; or (b) States that a party to the construction contract cannot suspend performance under the construction contract or terminate the construction contract if another party to the construction contract fails to make prompt payments under the construction contract pursuant to ORS 701.620 to 701.640. (2) Any provision, covenant or clause described in subsection (1) of this section is void and unenforceable.
- statuteORS 701.645enactment date not established
The words that state the rule
ORS 701.620 to 701.640 do not apply to: (1) A contract for the construction, alteration, repair, maintenance, moving or demolition of a building that is subject to the Low-Rise Residential Dwelling Code; (2) A public contract under ORS 279.835 to 279.855 or ORS chapter 279A, 279B or 279C; or (3) Housing in which all or part of the dwelling units are reserved for rental to persons having an income equal to or less than 80 percent of the median household income for the area as determined by the Housing and Community Services Department.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.