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When you run a business, you will likely enter commercial contracts with other companies. Contracts are legal agreements surrounding a deal and will outline the terms and conditions of the arrangement. Both parties must abide by the commercial agreement; otherwise, you might breach the contract and face legal consequences. In a commercial dispute, there are time limits to bring cases to court. This is known as the limitation period. This article will explain the role of period limitations in a contractual commercial dispute.
This guide outlines how to resolve commercial disputes.
What is Commercial Litigation?
Commercial litigation is when you choose a court to resolve your commercial dispute, and it is usually only advisable as a last resort to resolve a commercial dispute. To start court proceedings for a contractual commercial dispute, you will need first to issue a claim. However, before you reach the litigation stage, you have to comply with specific procedural rules known as ‘Pre-action Protocols’. These are in place to try to get the dispute resolved out of court. Failure to follow these can mean you pay otherwise unnecessary costs, as the court can impose these even if you win your claim.
Once you reach the litigation stage, a court will give you a timetable for the court proceedings with instructions on what you need to do and within what timeframe. Despite court litigation potentially being a method in which to resolve your contractual commercial dispute, you need to consider limitations first. This is crucial as it dictates whether or not you can bring a claim for breach of contract.
What is the Role of Limitation?
Limitation plays a role in your contractual commercial dispute when you decide to go to court.
What is a Limitation Period?
The ‘limitation period’ in a contractual dispute is the period in which you can bring a claim for a contractual breach in court proceedings. We call this the ‘limitation period’. As this is a legal timeframe, you must abide by it. If your contractual commercial dispute for breach of contract is in England and Wales, the period is six years from the point of contractual breach.
However, where your commercial contract is a deed, the limitation period is different. You have 12 years from the contractual breach in which to bring a claim for court litigation. A deed is a more formal legal document that has specific requirements to be valid. For example, the signatures on a deed, rather than a contract, need to be witnessed.
Parties to a commercial contract can agree to change the limitation period for a contractual breach. If so, you and the other party must agree to the change in writing. However, you must beware of any unfair contract terms that may lead to contractual claims and damages before beginning your contractual relationship with the other party. As such, you may need further legal advice from your lawyer.
What Happens if I am Near the End of the Limitation Period?
It is natural to panic if you realise you may be near the end of the limitation period for your contractual commercial dispute. As mentioned previously, you must make your claim before the end of the limitation period. Additionally, you must have also followed the pre-action protocols before you can make contractual claims.
Importantly, it is best to work with a qualified solicitor who can assist your business by:
- asking for a ‘stay of proceedings’; or
- creating a Standstill Agreement between you and the other party to the contract.
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Key Takeaways
If you fall into a dispute regarding your commercial contract, you may decide to make a claim through court litigation. Court litigation is where you ask a court to resolve the contractual breach through formal proceedings. Before doing so you must follow specific pre-action protocols to try to resolve the dispute out of court. If you do choose litigation to resolve your contractual dispute, you need to understand the role of limitation. There are specific timeframes in place where your business can bring forward a legal action. After you pass the limitation period, it is difficult and sometimes impossible for a court to hear your case.
If you need help understanding the role of limitation, our experienced disputes and litigation solicitors can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
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