What is a Statute of Limitation Period for a Commercial Dispute?

Running a business is not always a smooth process, and it is likely that as a business owner, you will face a dispute, potentially even with a simple contract. A commercial dispute is when you disagree with another business over an issue you cannot resolve. This will usually be about the supply of goods you or they sell or the services one of you offers. 

If you decide to take court action for a wrongful act to resolve a commercial dispute, such as contractual claims, you must do so within the relevant limitation period. You should also take legal advice whenever you take legal proceedings. This article will explain statutory limitation periods for commercial disputes and the applicable limitation periods.

What is Commercial Court Litigation? 

When you face a business dispute, various options are open to you regarding how you resolve it. Ideally, the best way is to resolve it as soon as possible and amicably as possible. You may alternatively choose alternative dispute resolution (ADR) methods to resolve your commercial disagreement, such as mediation. 

There is also the possibility that you and the other party decide upon commercial court litigation. Court litigation is where you and the other party decide to proceed through the commercial court to resolve your dispute. This means that a judge with expertise in commercial disputes will listen to the issues you disagree on and give a legally binding decision (a judgment), which you must abide by.

What is a Statute of Limitation Period?

If you do end up taking the route of commercial litigation through the commercial court toolbar for your business dispute, there are some essential points to note. One of these is the statute of limitation period. A statute of limitation period is the legal timeframe for a commercial entity to make a civil court claim against another. This is where they have been in a contract with the other business, or the other company has caused them to suffer damages due to something they have or have not done.

This time frame is called the ‘statute’ of limitation period because the period comes from a piece of UK law (statute) called The Limitation Act 1980. This Act details a variety of time limits covering a range of types of court claims. This includes commercial claims. 

What is the Statute of Limitation Period for a Commercial Claim?

The statute of limitation period for a commercial claim will depend on the reason for your claim. Generally speaking, a commercial claim is likely to be for breach of contract. The limitation time for this is six years from the breach of contract.

Another potential reason for a commercial claim may be professional negligence. If so, the statute of limitation period is also six years from the breach of contract. 

Why Do Commercial Claims Have a Limitation Period?

A commercial claim, or any legal claim, has a limitation period to ensure that a claim is brought as soon as possible from when the issues occurred. This is in the public interest. 

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The sooner you make a commercial claim, the more likely it is that evidence will be at hand, and the issues will remain fresh in the minds of both parties.  

Why is the Statute of Limitation Period Important?

The statute of limitation period for a commercial dispute is crucial. If you do not comply with it, your claim will probably fail. This is because the limitation period is a strict period that even the court has little power to change and only may where there is a powerful commercial claim.

Therefore, if you do try to make a commercial claim, no matter how strong your case may be, the other party will win by claiming the defence that the limitation period has expired. 

Key Takeaways

You will face court litigation if you have a commercial dispute and decide to make a commercial claim. It is essential to understand that you can only make a court claim within the statute of limitation period. This is a time frame to make a claim, which for commercial claims usually expires six years after the issue the claim is for. 

A statute of limitation period is in place for the public interest to ensure a claim is made as soon as possible. If you make a commercial claim after the statute of limitation period expires, it will likely fail. This is because a court will not readily extend the limitation date, and the defendant can use the expiry of the limitation date as their defence. 

If you need help understanding the statute of limitation period for a commercial dispute, LegalVision’s 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.