Contractual Limitation Period: Everything You Need to Know
A contractual limitation period holds any party accountable for any damages or failure to fulfill his or her end of a bargain.3 min read
A contractual limitation period holds any party accountable for any damages or failure to fulfill his or her end of a bargain. When it comes to construction agreements, limitation periods pertain to claims are brought against a contractor. The contractor is then held responsible for damage that takes place around this time. The agreement may also note the details of what may occur if any defects take place.
A regular arrangement occurs when the contractor must fix defects at his own expense, and if not, the company that hired the contractor can legally recover those costs if they hire another contractor to finish a job. In such a scenario, disputes can take place about as to whether they could be held liable for any damages.
With that, a contractor may not be released from liability if they reach the end of a liability limitation period. A statutory limitation may still run, which is the time where the contract can still be held liable when it to comes to the law. Construction agreements usually include certain clauses that permit extension, preservation, or the shortening of a statutory limitation period.
Importance of Clauses
Case law pertains to the clauses that show the effect is not clear, underlying the need to consider an appropriate limitation period when drafting or negotiating an agreement. The failure to factor in a limitation period could stop parties from recovering a loss that took place within the agreement. Whether contractual or statutory, limited periods should be considered in a careful fashion, especially in cases where disputes take place, or when a contract is being drafted.
When entering into subcontract appointment, the limitation period should coincide with the limitation period taking place under a primary contract appointment to prevent the risk of a liability gap. Attempts to extend the statutory limitation period should exclude a right to invoke potential limitation defenses, as prescribed under the Limitation Act of 1980. Doing so would reduce the risk of an agreement being unenforceable. If limitation clauses are aimed at reducing statute periods, you should include the following:
- Shorter periods could be prescribed by the law would take precedence over a specified period
- The end date after a claim could be issued
The Limitation Act details limitation periods applying to the relations of deeds and simple contracts. The Limitation Act permits litigation for such offenses as negligence and can be ushered in within a six-year time frame under simple contracts. On the other hand, you would receive twelve years if the contract came in the form of a deed. When it comes to English Law, the simple contract is official with a single signature.
A deed comprises a document or contract made official with higher requirements than a signature. For instance, an agreement must be signed by two directors of a corporation. Unless stated otherwise, the time periods start on the breach date or the date on which an omission or negligible act occurred. This is also called a Date of Accrual.
The limitation period does not begin from the date of the agreement. It’s commonplace to refer to actions that deal outside of the statutory time limit as comprising a time-barred scenario. The Latent Damage Act of the 1980s issued extensions to statutory limitation periods. The extension is restricted regarding negligence claims on latent defects or defects on property.
In cases of restitution, the period would depend on the grounds in seeking the restitution. The limitation period would be still enforced by a judge, even in cases where it may shorten the period to less than a year. The Latent Damage Act introduces the element of discoverability, providing for an additional period of three years from the discovery of a latent defect.
However, it still offers some degree of certainty to construction contractors through the fostering of a final claim date of 15 years from the accrual of the damage. Upon the approaching of a limitation period, claimants may wish to get an extension in exchange for not issuing legal proceedings immediately. If you are unsure about a potential case, consult an attorney to find out if you stand a good chance of winning your case.
If you need more information on a contractual limitation period, post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.