Opinion ID: 2613808
Heading Depth: 1
Heading Rank: 1

Heading: public policy underlying the statute

Text: ORS 20.096(1) was enacted in 1971. Prior to the enactment of the statute, it was common for contracts to contain provisions for the payment of attorney fees by one of the parties to the contract. Such provisions put the disfavored party at a distinct tactical disadvantage. For example, if the disfavored party could assert a defense but the likelihood of success was less than certain, the party might be reluctant to defend the case for fear of the substantial penalty in the form of attorney fees to the prevailing party. The effect of such one-sided contractual provisions was to deter the assertion of meritorious defense and to cause some cases to be settled or go undefended when the disfavored party would otherwise defend. The purpose of ORS 20.096 was to put the parties on equal footing, so that if (1) the favored party stood to obtain attorney fees by asserting a claim, the disfavored party, if the claim were successfully defended, would also obtain attorney fees, and (2) if the disfavored party successfully asserted a claim involving a contractual provision providing for attorney fees to the favored party, attorney fees would be allowed to the disfavored party. The passage of the statute resulted in the withdrawal of the tactical advantage previously enjoyed by only the favored party. [1] The result of the majority opinion is to make the attorney fee provisions in the case at bar reciprocal with a capital R, for the disfavored party's rights, under the majority opinion, exceed the rights given to the favored party under the contract.