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Stephen Whelan, Partner, SNR DENTON US LLP

Dodging a Bullet on the Oregon Trail
Thursday, March 10 2011 | 02:17 PM
Stephen Whelan

Readers of this blog were alerted last month to potentially ruinous legislation which had been introduced in the Oregon legislature. Senate Bill 892 would have overridden any contractual “hell or high water” clauses and permitted a lessee or buyer with any “dispute” with the seller or lessor--even if unrelated to the sale or lease contract--to deposit any “payments” (not just periodic installment purchase or rental payments) into an attorney trust account or a statutory escrow trust account, until the dispute had been “resolved”. There was no provision for the seller or lessor to receive interest on any amounts so escrowed.

The legislation also would have applied to lenders and securitization investors, so the Bill threatened to complicate any financing involving Oregon equipment or an Oregon lessee--and probably any Oregon seller, lessor or lender. But this week, face to face discussions by the Equipment Leasing and Finance Association (and member law firm Farleigh Wada Witt) with the sponsor of the Bill were followed by withdrawal of the legislation. Further discussions are expected because of the sponsor’s unsatisfactory experience with processing equipment acquired for use in his business, but it appears that the Senator is aware that legislation as originally introduced could have impeded the flow of capital to Oregon businesses.
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