Litigation

Oregon Court of Appeals: Party who claims no contract existed can't recover attorney fees

By Lori Bauman

Contracts often provide for an award of attorney fees to one of the parties in the event of litigation relating to the contract.  Under Oregon statutory law, a prevailing party in such a lawsuit is entitled to recover its attorney fees even if "the party prevails by reason of a claim or defense asserting that the contract is . . . void or unenforceable."  ORS 20.083. 

The Oregon Court of Appeals addressed last week whether this statute applies when the prevailing party convinces the court that the contract was never finalized.  In Dess Properties, LLC v. Sheridan Truck & Heavy Equipment, LLC, the parties negotiated a contract to sell real property.  Plaintiff later sued to enforce the contract, but defendant succeeded in arguing that the parties did not complete the deal.  Defendant sought to recover its attorney fees under ORS 20.083, claiming that a never-finalized contract is the same as a "void" contract.  The court refused to award fees, holding that the phrase "void contract" is a legal term of art meaning an agreement "actually entered into [but] unenforceable" due to failure to comply with some other legal requirement.  In this case, the contract was nonexistent rather than void, and the prevailing party was not entitled to recover fees.

Full post as published by Northwest Business Litigation Blog on June 17, 2008 (boomark / email).