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Tuesday
Oct302007

Arbitration Clauses Enforceable in Oregon

Conf%20Table%20216x143.jpgIf you have subscribed to LegalBriefs for a while or attended one of my many seminars, you know that I am a big fan of arbitration. You may have noticed, however, that the 2007 Oregon Legislature passed an anti-arbitration bill last Spring or that the Oregon Court of Appeals had struck down certain arbitration clauses.

You might be wondering whether arbitration clauses in consumer contracts, contracts with consumers, employment agreements and business-to-business documents are enforceable.

The short answer is yes. Arbitration can be an effective, timely, cost-effective way to resolve consumer disputes, employee claims and commercial disagreements. The ability to resolve disputes by arbitration can be a benefit for your business. In order to take advantage of this benefit, however, you must not try to gain an unfair advantage. If you go too far, the arbitration provision may be ruled to be invalid.

The 2007 session of the Oregon Legislature enacted Senate Bill 484. This legislation originally would have prohibited contracts with mandatory arbitration clauses. The bill was amended (after lobbying by Associated Oregon Industries and other groups) to provide that a consumer may revoke an arbitration provision if it requires arbitration outside of Oregon. If your agreement provides for arbitration inside of Oregon, does not involve the purchase of consumer goods or exceeds $15,000, your arbitration provision is enforceable.

The Oregon Court of Appeals this year has struck down Oregon contracts with arbitration provisions. It has also held that other arbitration provisions are enforceable. When the arbitration provision prevented class action claims, the court ruled that the provision was unenforceable. However, when an agreement provided for arbitration but did not prevent class action claims, the court upheld the agreement. Fair arbitration provisions are upheld. Those that go too far are not.

The arbitration provisions we have drafted for employment documents, home builder construction agreements and other business contracts continue to be enforceable.

If your agreements provided for arbitration, check to make sure that they provide for arbitration in Oregon. Also make sure that your agreements do not impose other conditions limiting the right to bring claims against you. If your agreements pass both of these tests, they should be enforceable. If you have any questions, you should have your agreements reviewed by an attorney familiar with recent statutes and court decisions.

If your agreements with your customers, your vendors and your employees do not contain arbitration provisions, what are you waiting for? Now is the time to take a proactive step to provide that disputes will be resolved in an effective, timely, cost-effective manner. Consult an attorney experienced in this area to update your agreements today.

Alan

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