One of the most common and costly mistakes businesses make in contract disputes is waiting too long to take action. By the time a dispute has escalated and legal advice is sought, the opportunity to bring a claim within wider contract disputes may already be at risk.
Limitation periods impose strict time limits on when contract claims can be brought. If those limits are missed, even a strong claim may be lost entirely. This can come as a surprise to businesses that have been focused on maintaining commercial relationships or resolving matters informally.
This article explains how limitation periods work in contract disputes, when time starts running, and why delay can significantly weaken a business’s position.
At a glance
Contract claims are subject to strict limitation periods. In most cases, businesses have six years from the date of breach to bring a claim, although longer periods may apply where contracts are executed as deeds.
Once a limitation period expires, a claim may be barred completely, regardless of its merits. Delay can also weaken evidence and reduce leverage, even before a deadline is reached.
Early legal advice helps businesses identify limitation risks and take proportionate steps to protect their position.
What is a limitation period in a contract dispute?
A limitation period is the time limit within which a legal claim must be started.
In contract disputes, limitation periods are designed to provide certainty and finality. They prevent claims from being brought many years after events occurred, when evidence may be lost and memories faded.
Limitation periods apply automatically. They do not depend on whether a party considers it fair to bring a claim later. Once a limitation period has expired, the court will usually refuse to allow the claim to proceed.
How long do businesses have to bring a contract claim?
In most commercial contract disputes, the limitation period is six years.
This applies to contracts made in writing or orally. For contracts executed as deeds, the limitation period is generally longer, typically twelve years.
The distinction between a standard contract and a deed can be critical. Businesses are often unaware of how their contract was executed and may assume a longer period applies when it does not.
Understanding which limitation period applies is a key early step in any dispute.
When does time start running for limitation purposes?
Time usually starts running from the date of the breach, not from the date the breach is discovered.
This can cause difficulty where problems emerge gradually or where loss is not immediately apparent following a breach of contract. For example, defective performance may not be identified until some time after the breach occurred, a scenario commonly seen in disputes involving poor performance.
In most contract claims, the clock starts ticking as soon as the contractual obligation is not met. Delay in recognising the problem does not usually extend the limitation period.
Do limitation periods differ for deeds and written contracts?
Yes. The way a contract is executed can affect the limitation period.
Contracts executed as deeds are subject to longer limitation periods than standard written contracts. However, not all contracts that look formal are deeds in legal terms.
Whether a contract is a deed depends on specific legal requirements, including how it is executed. This is often overlooked until a dispute arises.
Legal advice can help clarify whether a contract is a deed and what limitation period applies.
What happens if a limitation period expires?
If a limitation period expires, the claim is usually barred.
This means the court will not allow the claim to proceed, even if it would otherwise have succeeded. The other party can raise limitation as a complete defence.
In practice, this can bring a dispute to an abrupt end and remove leverage from the party seeking to claim, often forcing resolution through settlement agreements on unfavourable terms. It may also affect negotiation dynamics if limitation is approaching or has passed.
Can limitation periods be extended or paused?
In limited circumstances, limitation periods may be extended or paused, but this is the exception rather than the rule.
For example, the parties may agree to extend time, or limitation may be postponed in cases involving deliberate concealment. These situations are fact-specific and often difficult to establish.
Businesses should not assume that limitation can be avoided or extended without clear legal grounds.
Why delaying action can weaken a contract dispute
Even before a limitation period expires, delay can weaken a claim.
Evidence may be lost, documents destroyed, or witnesses become unavailable, which is particularly problematic in disputes involving unpaid invoices where records and communications are critical. Commercial leverage may also diminish as time passes and positions become entrenched.
Delay can also create the impression that the breach was not considered serious at the time, which may affect credibility.
Acting promptly helps preserve options and strengthens negotiating positions.
When legal advice is critical on limitation risk
Legal advice is particularly important where a dispute involves historic breaches or long-running issues.
Advice can help identify when breaches occurred, what limitation period applies, and whether any steps are needed to protect the business’s position. This may include issuing proceedings or taking other formal steps before time runs out as part of an overall dispute resolution strategy.
Early advice often prevents claims from being lost unnecessarily.
Final thoughts
Limitation periods are a critical but often overlooked aspect of contract disputes.
Understanding when time starts running and acting before deadlines expire helps businesses avoid losing valuable rights. Even where immediate legal action is not desired, understanding limitation risk allows directors to make informed decisions consistent with their wider directors’ responsibilities. Early assessment and proportionate action are key to protecting a business’s position.
Francis Wilks & Jones solicitors have been advising businesses and individuals resolve contract disputes since 2002. Our Business Disputes team regularly achieve successful outcomes for our clients, often in the most difficult of circumstances. Speak to one of our team today for immediate help.
- Andrew Carter is a highly experienced partner of 20 years and he heads up our business disputes team. Andrew regularly deals with all types of contractual claim and business dispute claims for over 20 years and has successfully dealt with hundreds of cases in his time.
- Gemma Newing is an experienced commercial litigation solicitor specialising in commercial contractual disputes and company disputes. She acts for a broad range of national and international clients, including SMEs, large corporations and high-net-worth individuals.
In addition to the above experts, we have a dedicated team of other solicitors at FWJ with experience advising directors and business owners on a range of different claims. Where needed on a claim, we have access to a trusted network of third party professionals such as accountants, tax advisers, valuers and barristers.
If you are still at the research stage, our Contract Disputes Guide explains the legal framework and dispute resolution options in more detail.
