Statute of Limitations Explained
A statute of limitations is the statute which sets the deadline for anyone to assert a legal action based on an event that forms the basis of the action. The deadline set by the statute of limitations only sets the deadline for a claimant to bring an action—the matter need not be fully resolved before the deadline. If the statutory deadline passes before the claim is filed, the claim is forever barred in most cases (absent a valid agreement by the parties to stop the clock from running).
The primary purpose of any statute of limitations is to ensure resolution of a civil dispute or criminal charge within a time period deemed “reasonable” by the legislature. Fundamental fairness requires claimants to assert their claims with reasonable diligence. Otherwise, the claim can become stale and the passage of time obscures witness memories. At some point, the defendant’s ability to disprove it or reduce damages becomes unfairly impaired.
The statutes of limitations for most breach of contract claims are set by state law, though Federal law establishes the deadlines for criminal charges and civil actions based on Federal statutes. The statutes of limitations vary between the Federal law and the states.
Also, different states have different statutes of limitations for the same action. For example, the parties in a contract dispute in one state may have only two years to initiate a legal action, while in another state they may have three years for the very same claim. For breach of contract actions, these time periods vary widely between the states. In some states, the time period is as low as 3 years, in others it is as many as 15 years. Most states have longer statutes of limitations for written contracts, and shorter statutes for oral contracts. In a few, the time limit is the same for all contracts, whether written or oral.
The statutes establish different limitations time periods for different types of actions. For example, the statute of limitations for a civil action based on negligence may only be two years, while the crime of murder has no statute of limitations.
Breach of Contract Explained
A legal action for “breach of contract” is a civil cause of action brought by one or more parties (called plaintiff) to a binding agreement, or contract, against one or more parties (called defendant) to the contract. In such a case, the plaintiffs allege that the defendants breached the contract by failing to live up to their contract obligations. The breach may be based on the defendants’ non-performance, inadequate performance, or interference with the other party’s performance.
To succeed in a breach of contract action, the plaintiff must be able to prove the alleged breach was “material”. A material breach means the breach has defeated the purpose of the contract and further performance would be futile. A merely minor deviation from the terms of the contract will not support a breach of contract action.
Statute of Limitations for Breach of Contract
The limitations period for claims based on a breach of a written contract begins to “run” once the event that gives rise to an action on the contract occurs. It usually does not matter when the plaintiff discovers the facts. For example, assume you paid a contractor to deliver 15 tons of a certain kind of gravel to you on a certain date, but the contractor fails to deliver it as agreed. The contractor’s failure to deliver is a breach of the contract. The statute of limitations began to run on the date the contractor failed to deliver the gravel.
Not all contracts are in writing. Most states recognize the enforceability of oral contracts in limited specific situations. However, the statutes of limitations period is usually longer for written contracts than for oral contracts.
Breach of Contract Statute of Limitations in the State of Georgia
In the State of Georgia, the statutes of limitations for breaches of contracts are very specific.
For written contracts, the limitations period ends six years after the contract becomes due and payable, beginning on the date of the last payment. For oral contracts, however, the deadline for bringing a breach of contract action is only four years after the right of action accrues.
However, the limitations period depends on the type of contract in question. Other statutes apply to specific types of contracts. For example, credit cards are treated as written agreements for the statute of limitations purposes. Automobile contracts have four year statutes of limitations under the Georgia Uniform Commercial Code provisions on contracts for the sale of goods. On open accounts, the limitations period is four years. Interesting that in Georgia, a payment on the account unaccompanied by a writing acknowledging the debt, does not affect tolling the statute. In such cases, therefore, the statutory period runs from the date of default, not the date of last payment.
Consult an Experienced Litigation Attorney
If you believe you have a cause of action for breach of contract, or if you think you could be sued for a breach, you should contact an experienced litigation attorney for a free consultation about your potential case. You need to act quickly. The statute of limitations period is running. If you wait too long to bring your case, the statute of limitations may bar your claim. The sooner you act to protect your claim, the more likely you are to be compensated for your damages as well as reduce further damages.
If you may be a defendant, the statute of limitations may be a viable defense against a breach of contract action.
No matter which side of the case you may find yourself, you need the help of an experienced litigation attorney to protect your rights.