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Sometimes businesses have to deal with commercial disputes with each other or their customers. This could be over a breach of a simple contract or a business failing to deliver goods. It is good practice to resolve business disputes (for example, to amicably agree to a resolution, which helps save the business relationship) out of court rather than make a legal claim. However, there are times when commercial disputes turn into litigation when you might want to take legal advice. Often, the first thing to consider is the relevant limitation period for your commercial dispute, which will inform you of how long you have to start legal proceedings. This article will explain three key points about the statutory limitation period for commercial disputes.
This guide outlines how to resolve commercial disputes.
What is the Statute of Limitation Period for Commercial Disputes?
The statute of limitation period for commercial disputes is the timeframe in which you can start proceedings in a dispute. The limitation periods are in the Limitation Act 1980 and vary according to the type of claim. The statute of limitation period for commercial disputes depends on the nature of the dispute. Businesses can get into commercial disputes for a number of reasons, such as contractual issues. For contractual disputes, the limitation period to start a case is six years.
Three Key Points About the Statute of Limitation Period
As a business owner, it is helpful to understand the statute of limitation period for commercial disputes in case you start court litigation.
1. Why is There a Limitation Period?
The law details a limitation period for commercial disputes and other types of court proceedings for ‘public policy’ reasons. This means that it is in the public interest for there to be a limited period to start litigation on a matter. As time goes on, it becomes more difficult to ensure justice will prevail. In other words, to ensure that the outcome of the case is fair and correct, the law sets certain limitation periods. Likewise, evidence is more difficult to obtain as time progresses as people cannot always remember the details as clearly.
2. What Happens When the Limitation Period Passes?
If a claim is brought but the limitation period has passed, the other party can use this as a defence to the claim. They will refer to this defence as ‘time-barred’. This means that the court may throw your commercial dispute out.
However, it is critical to note that this defence does not arise automatically. Instead, the defendant must explicitly say that this is their defence. This is because courts will not automatically check each claim they receive to see if the limitation period has expired or not. Therefore, where it has, and is not raised as a defence, a court may not notice this.
3. When Does the Limitation Period Start?
The start time for the limitation period is the first moment when you make a claim in court. Therefore, if the commercial dispute is a breach of contract, the limitation period begins when the breach of contract occurs. This could be many years after the contract was entered into, or it could be very soon after.
The start date for the limitation period for commercial claims can differ from other civil claims. Therefore, you should be aware of this so you understand and do not miss your opportunity to bring a claim. For example, in negligence cases, such as a personal injury claim, the limitation period can start when the injury occurs or on the ‘date of knowledge’. The latter is when the claimant is aware of the injury.
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Key Takeaways
When commencing litigation in a business dispute, you must do so within the statute of limitation period for the type of claim. This is the period with which you can start a claim. After this, if you start a claim, the other side can raise the defence that the claim is ‘time-barred’ or ‘statute-barred.’ In this case, a court will have limited choice but to accept that the limitation period has passed.
Having a statute of limitations in the first place is a matter of public interest and so parties can deal with claims around the time the issue arises. Once the limitation period passes, a defendant can use this as a defence to a claim. However, this does not apply automatically and requires the defendant to raise it.
If you need help with your dispute and calculating when the statute of limitation will pass for your matter, 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 for a low monthly fee. Call us today on 0808 196 8584 or visit our membership page.
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