A common legal term that you may have come across is "Statute of Limitations" and if you are filing a lawsuit against someone, you don't want to see that raised as an Affirmative Defense in the answer to your complaint. When you are crafting contracts for your business, it's important that you understand what the breach of contract statute of limitations is in the law of the state that governs your contract.
A statute of limitations is an essential defense to a lawsuit. When it applies, it limits a party's ability to sue another party. So for example, if you are suing for a breach of contract, but the breach happened 12 years ago, in all the states in the United States, unless there's an exception, that lawsuit is brought too late and the defense means that the court can dismiss that lawsuit for a statute of limitations violation.
What to Look for with a Statute of Limitations
When you are trying to figure out if you have a statute of limitations issue in your situation, there are a few key questions to ask:
- When does the statute of limitations start to run? This is a prime reason why you want to make sure you're working with professionals like an attorney so you can determine when that statute of limitations starts running and what the end date is.
- Is a government entity involved? If you're dealing with a government entity, the statute of limitation may actually be different. They may have shorter time periods and they may require that you actually give them a certain type of notice to let them know that you may be bringing the lawsuit.
- Has the statute of limitations been tolled? You also need to look to see if the statute of limitations has been tolled, which means the statute of limitations time period stopped running at some point. If we look at the last couple of years, many states actually used this due to the COVID pandemic when courts were closed and cases couldn't proceed. They tolled the statute of limitations on certain types of actions, giving the people more time to file their lawsuits.
Examples of How States Differ
Taking a breach of contract for example, you can see why it's so important that you know what state you're in and what the statute of limitations is.
- 3 years - If you're in Alaska, Colorado, Delaware, D.C, Maryland, Mississippi, New Hampshire, North Carolina or South Carolina, the statute of limitations for breach of contract is only three years. Now that may not seem like a short period, but when you look at a lot of the other states and see how long it can take for things to happen, then you have to find an attorney and bring a lawsuit that three year period can be shorter than you think it is.
- 6 years - Luckily for me, in all the states I'm admitted to practice, we have a six-year statute of limitations for contract actions. So that's in Connecticut, Minnesota, New York and New Jersey. So for me, it's pretty simple. When people come to me and say I'm in one of those four states, there's been a breach of contract, what's the statute of limitations? I'm pretty comfortable knowing that we're looking at a six-year statute of limitations and let's start looking at the situation to figure out when did that statute start running?
- 10 years - There are actually a handful of states that give you 10 years as a statute of limitations on your breach of contract. So if you're in Illinois, Indiana, Iowa, Kentucky, Louisiana, Missouri, Rhode Island, West Virginia and Wyoming, any of those states they have a 10-year statute of limitations for breach of contract. That means that if you were in a contract with somebody, and it ended and you thought everything was fine, you may not truly be in the clear for 10 years, you could still be sued up to 10 years later for a breach of contract action.
With all these different periods, you can see why it's important that you understand, first of all, what the statute of limitations is in the state where you're in. This is also another good reason why you need to understand what your contract says. If your contract says that this contract is governed by the law of Colorado, then you've got a three-year statute of limitations. However, if that contract says the laws of Louisiana govern it, you're looking at 10 years. It's important for you to know this difference and know where you are and what those time periods are that you're dealing with. You may have terminated your contract, but you may still end up in a lawsuit down the road.
If you have more questions on the statute of limitations, or you're in a lawsuit or contemplating one that may have a statute of limitations issue, you can set up a Legal Strategy Session, we will have a 15 or 20-minute phone call where we can go through your current situation, and let's plan out some options and next steps for you so that you know what the statute of limitations is for your situation, and to make sure you're not going to miss it and have your case dismissed because you waited too long.