Today, the House Civil Justice Committee held its second hearing on legislation that would reduce the statute of limitations on contracts from eight years to three years. This legislation, HB 251, is supported by the Ohio Chamber of Commerce and is a public policy priority for our group because shortening the statute of limitations would make Ohio a better place for businesses to call home.
Testifying on behalf of the Ohio Chamber was the Ohio Alliance for Civil Justice, which is an organization comprised of the state’s leading business associations including the Ohio Chamber of Commerce, NFIB-Ohio, the Ohio Manufacturers’ Association, the Ohio Council of Retail Merchants and the Ohio Society of CPAs. The mission of the group is to promote a common-sense civil justice system with the aim of stopping lawsuit abuse.
In its testimony, the Alliance highlighted the benefits of shortening the statute of limitations for written and oral contracts. Under current Ohio law, businesses face a prolonged risk of liability because a party has up to eight years to bring a claim for breach of contract. Even when a company has fulfilled its contractual obligations the extended time frame of potential liability prevents capital investments and business expansion. Additionally, due to possible litigation, companies must retain physical and electronic documents throughout the eight-year period, which comes at a substantial cost.
HB 251 looks to solve these problems by limiting the risk of potential lawsuits through reducing the time frame to file a breach of contract claim to three years.
In addition to the risk mitigation benefits, the bill will also help improve the state’s economic competitiveness with other states. A recent CNBC ranking of America’s Top States for Business listed Ohio as the 15th best state. Notably, every state with a superior ranking to Ohio has a statute of limitations on written contracts less than Ohio’s current eight-year limit.
The Ohio Chamber of Commerce will continue to lend support for HB 251 as it continues its way through the legislative process because its passage would mean more certainty, lower costs and an improved business climate for Ohio employers.