Summary
You have six years from the date of breach of contract to issue a claim, subject to certain rules.
This is called the Limitation Period. This article looks at the Limitation Period in a bit more detail.
In an earlier blog I discussed what breach of contract was all about. This blog answers another frequently asked question, about the time limits involved for suing someone - known as the limitation period.
The Limitation Act 1980
The Limitation Act 1980 is what dictates what the limitation periods are for various matters. This act doesn't just address contract claims, it also covers claims in Tort, claims over loans and other legal claims.
For contract disputes, it is section 5 of the Act which we're concerned with. That act states:
Time limit for actions founded on simple contract.
An action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued
http://www.legislation.gov.uk/ukpga/1980/58/section/5
To understand this, we need to delve into some of the jargon.
What is a Cause of Action?
In any legal matter, a cause of action is the thing that creates (or causes) the potential legal claim.
With contract disputes, it usually the breach of contract itself that is the cause of action.
However, contract disputes can involve:
- misrepresentation
- formation issues
- performance issues
Misrepresentation is where one party says or promises something, which makes the other party enter into the contract. So if that's what you're claiming (in common language, that you have been "mis-sold") then the cause of action may well start to accrue from when the representation was made or when the contract was entered into.
Most of the time, the breach of contract will occur during the contract, and therefore the cause of action arises at that point. Examples could be:
- Non-payment of invoice
- Non-delivery of goods or services
Is Limitation always 6 years?
For breach of contract claims, yes, generally you have 6 years from the breach of contract to bring a claim.
This means that you will need to have issued a Claim in Court (County Court or High Court) before the expiry of 6 years from the date of the breach of contract or cause of action. Even 1 day after is likely to render the Claim out of time, and the Courts can be quite strict on this - after all, you did have 6 years to bring the claim.
There is another rule in the Limitation Act which can sometimes assist. Section 14A Limitation Act 1980 relates to negligence claims (not Breach of Contract) but can often still be used as a potential way to get around the 6 year time limit.
Firstly, there needs to be negligence and that will form part of another blog. But assuming there is, the section 14A allows for a three-year period from the date of knowledge.
Date of knowledge is, in itself, a complicated matter and indeed I had one of the most recent leading cases on the point in Kays Hotels v Barclays Bank. I might do a blog about the date of knowledge at some point too.
Summary
In short, you have 6 years from the date a contract is breached to issue a claim in Court. Equally, if you are defending a claim, it means the claimant cannot sue you for something which happened more than 6 years ago.
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Written by Steven Mather, a business solicitor acting on company sales and purchases. This is general information about the law, not legal advice on your situation.
