What are My Business’ Options for Commercial Disputes if the Statute of Limitations is Too Short?

As a business owner, you will usually want to avoid court action. A commercial dispute, even concerning a simple contract, can be expensive and time-consuming. Therefore, trying to resolve business disputes by alternative means is good. However, there may be times when court proceedings are your only option. If so, you must apply for your court claim before the statute of limitations expires. You should also take legal advice for potential claims. This article will explain your business’ options for commercial disputes if the relevant limitation period is too short.

What is the Statute of Limitations?

When you decide to apply to the court for a civil claim, you have a specific period to do so. This is what we call the statute of limitations.  It details when you can make a claim and, more importantly, when you can no longer make a claim. 

This timeframe is a legal period detailed in the Limitation Act 1980. The limitation period varies depending on the type of civil claim. For example, if your dispute concerns a breach of a business contract, the timeframe is six years.

Being aware of the statute of limitations as a business is essential. Otherwise, you may miss your chance to make a commercial claim. Equally, it is necessary to be aware of it in case another party claims against you. If the limitation period has expired, you can utilise this as your defence to the claim. 

What are My Business’ Options for Commercial Disputes if the Statute of Limitations Has Expired?

If you were not previously aware of the limitation period, you might now realise that the limitation period for a claim you are considering has expired or will expire soon. If this is the case, you should know what your options are. 

For example, your business may be able to extend the limitation period. This depends on specific circumstances. We look at the potential ways in which the limitation period can be extended below.

1. Deliberate Concealment

Deliberate concealment occurs when the other party (known as the defendant) deliberately conceals a material fact from you. The defendant must have done this purposely, and it must affect your right to make a claim. However, the latter can be hard to prove. This is because the defendant will have to know a claim would have arisen before you can claim they deliberately hid a material fact from you. An excellent commercial lawyer will be able to help you with this.

Suppose you demonstrate there has been deliberate concealment. In that case, the prescribed limitation period starts from the time you have learned about the deliberate concealment or when you could have reasonably diligently done so.

2. Fraud

Suppose the claim you wish to make results from the defendant’s fraud; the limitation period may be extended. Again, the Limitation Act 1980 details this. 

In this case, the limitation period will start running once you find out that there has been fraud.  For example, you have been the victim of credit card fraud.

3. Mistake

The third way the limitation period can be extended is if there has been a mistake. This may apply when you make a legal claim to relieve you from the consequences of a mistake. 

For example, a claim to recover money where a payment is made by mistake.  Like the above two options, this option also means the limitation period starts when you learnt about the error. Alternatively, the six years begin when you would have found out about it after all reasonable diligence to do so. 

4. Standstill Agreement

There is also an option to enter into a standstill agreement. 

5. Stay in Proceedings

A further option for your business is a stay in proceedings. Naturally, if you begin court proceedings, the limitation period will stop. However, rather than immediately continuing with the proceedings, you can apply for a stay. This effectively pauses the proceedings, meaning you no longer need to worry about the limitation period. 

You need to apply to the court for a stay in proceedings. Once done, you must formulate your case with your legal team. 

Supplier Contracts Checklist

Download this free Supplier Contracts Checklist to ensure your contracts will meet your business’ needs.

Download Now

Key Takeaways

If you make a commercial claim for your business, you must apply to the court within a specific period. This is known as the limitation period or statute of limitations. However, you may want to know your options if the limitation period is short. There are several potential options open to you. These include whether there has been a deliberate concealment or fraud by the defendant or where there has been a mistake. You can also enter into or rely on a standstill agreement, or stay proceedings. The former you agree with the defendant, and the latter you apply to the court for. 

If you need help understanding business options for commercial disputes if the statute of limitations is too short, 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. So call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions