Legislation to reduce the statutes of limitation on contracts passed the Ohio House by a unanimous vote of 92-0. The bill – HB 251 – sponsored by Rep. George Lang and Rep. Brett Hillyer will have a positive impact on Ohio’s business and legal climates by reducing the timeframe employers face liability under a contract.

The statutes of limitation for contract claims negatively impacts Ohio’s legal climate because it is among the longest in the nation. Under current law, plaintiffs may bring a claim for breach of a written contract within eight or six years for an oral contract. 

This puts Ohio employers at a disadvantage when compared to other states because their statutes are more business-friendly. In fact, states like California, Massachusetts, New Jersey, New York and Pennsylvania all have a shorter statute of limitation for written contracts.

The Ohio Chamber weighed in on the legislation while it was pending in House Civil Justice Committee through the Ohio Alliance of Civil Justice, which is an organization comprised of statewide business organizations and employers. I previously blogged about the Alliance’s proponent testimony here.

Lowering the statutes of limitation on contract claims will bolster Ohio’s business climate because a common-sense system of liability is an important component of a strong business climate. A prolonged statute of limitation increases employer’s potential liability and makes defending against a claim a challenge because the availability of witnesses and records becomes problematic as more time elapses between the breach and when a claim is filed.

Importantly, even when all the obligations of a contract have been satisfied, employers still must account for the possibility of a lawsuit because plaintiffs retain the right to file a claim until the statute of limitation has been reached.

As the bill moves to the Ohio Senate, the Ohio Chamber and our allies at the Ohio Alliance for Civil Justice will continue our push to make our legal and business climates more competitive by reducing the statute of limitation on contracts.