Over the years, the Oregon Legislature has added a fairly extensive list of requirements that contractors must satisfy in order for their contracts to be fully compliant with Oregon law.

For example, contractors must have a written contract when they perform work directly for a homeowner and the total contract price exceeds $2,000. This requirement applies to work on "residential structures" or "zero-lot-line dwellings." ORS 701.305.

If the original project was less than $2,000 but increases over that amount, then the contractor must provide a written contract within five days of when the contractor knew or should have known that the $2,000 threshold would be exceeded.

Under another statute (ORS 87.037), an original contractor who fails to comply with the above written contract requirements is prohibited from filing a construction lien claim.

In addition to requiring a written contract in certain situations, ORS 701.305 also mandates certain content for those contracts.

First, these residential contracts must use "words of common understanding" and must include "clear" contractual terms. It will likely be up to the courts to decide exactly what that means. For example, is the word "indemnification" one that is either "of common understanding" or "clear"?

Second, these residential contracts must include all of the following (see OAR 812-012-0110):

• A statement that the contractor is licensed by the CCB;
• The contractor's name, license number, and address (all of which must be consistent with the CCB's current records);
• An acknowledgement of a written offer of warranty (this only applies in certain situations; see below for more information);
• A list of the required notices (this only applies in certain situations);
• Normal contract details such as name and address of the owner, address of the work location, description of the work to be performed, and price and payment terms;
• An explanation of the owner's rights under the contract - these rights include (1) the right to file a CCB complaint; and (2) whether there is a mediation or arbitration provision in the contract.

This last requirement must be set forth "in a conspicuous manner as defined by the board by rule." ORS 701.035(1)(e). To date, the CCB has only stated that the terms must all be "legible and in dark ink." OAR 812-012-0110(2). It may be interesting to see whether parties may try to graft on case law under the UCC that addresses whether contract terms are "conspicuous" as a matter of law.

As a final point, ORS 701.315 states that a residential contract may not include a provision that limits the right of a person to file a CCB complaint. Since this statute allows mediation and arbitration provisions, it is primarily intended to bar those contract terms that completely waive the right to file a CCB complaint. Violations of this provision can lead to CCB Enforcement penalties of up to $5,000. OAR 812-005-0800(34).

The Residential Contract Checklist [hyperlink] is a handy tool for reviewing your contracts. Although it is specifically addressed to the Oregon requirements, many of the same issues should be considered no matter what state you are working in.

In many ways, the law in Washington is very different than in Oregon. For example, Washington has none of the above detailed requirements for construction contracts. Instead, contractors in Washington must comply with general common-law contract principles.

Many of those principles are found in the Uniform Commercial Code and the case law interpreting those provisions. Also, the Washington State Bar Association's Construction Law Section has published two form residential construction contracts (a fixed price contract and a time and materials contract).