Senate Bill 13 is about providing certainty for business owners

Date: February 08, 2021

On February 3, 2021, the Ohio Senate unanimously passed Senate Bill 13 (SB 13). SB 13 is legislation that will improve the state’s business and legal climates by reforming Ohio’s contract laws. The bill, sponsored by fellow NFIB member Senator George Lang, mirrors House Bill 251 from the prior General Assembly which passed the Ohio House and Senate with bi-partisan support but failed to make it to Governor DeWine’s desk during the final days of the lame duck session. Following a unanimous vote by the Ohio House of Representatives, SB 13 becomes the first piece of legislation to reach Governor DeWine’s desk during this legislative session.

Senate Bill 13 is about providing certainty for business owners. Currently, a business owner must maintain documents and records pertaining to a written contract for eight years. This bears a very real expense. With the increase in technology and more sophisticated monitoring of contractual relationships, there is no reason to maintain these records for such a long duration. Furthermore, reducing the duration of the contract will allow the business owner to move to future projects with the certainty that the previous contract is not hanging over their head, thus freeing up capital to further invest in their enterprises and their communities.

Ohio’s business climate does not exist in a vacuum.  We must look at what other states are doing to remain competitive. In CNBC’s “America’s Top States for Business” for 2019, Ohio achieved a number 10 ranking, moving up five spots from 2018.  There are a variety of factors used to make these rankings, but it is important to note that every state with a superior ranking to Ohio has a statute of limitations on a written contract less than Ohio’s. Reducing the statute of limitations on written contracts is a low-risk strategy to improve Ohio’s business climate. Moving from eight years to six years will put Ohio on par with the national average.  

NFIB continues to appreciate the work done in 2012 when the General Assembly reduced the statute of limitations on a contract from fifteen years to eight years. We are aware of no negative impacts from this reduction. However, soon after Ohio reduced our statute of limitations on a contract, Kentucky moved their period from fifteen years to ten years. Business attraction and growth is a very competitive environment.  Now, moving from eight years to six years will likely see a similarly easy transition.

The three key reasons why SB 13 was a Key Vote in the Ohio Senate for NFIB:

  • Senate Bill 13 reduces Ohio’s statute of limitations (SOL) on written contracts from 8 years to 6 years, bringing Ohio more in line with the national average. Senate Bill 13 also reduces contracts not in writing from 6 years to 4 years.  Senate Bill 13 builds upon Ohio’s progress from several years ago in reducing our statute of limitations from 15 years to the current 8.  We believe this is the next logical step in ensuring Ohio is not an outlier by having a longer SOL. 
  • Today, a business owner must maintain documents and records pertaining to a written contract for eight years which incurs a very real expense. With the increase in technology and more sophisticated monitoring of contractual relationships, there is no reason to maintain these records for such a long duration. Furthermore, reducing the SOL will allow a business owner to free up capital to take on new projects with the certainty that a previous contract is not hanging over the business owner.
  • Senate Bill 13 will make Ohio more business friendly. Ohio will be more competitive as we move our SOL on written contracts closer to, or equal to states we frequently are measured against. Senate Bill 13 keeps Ohio moving in the right direction as a state to maintain and locate a business.

Related Content: NFIB in My State | Legal | Ohio

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