Statute of Limitations in Contracts: What You Need to Know
What Is a Statute of Limitations?
A statute of limitations is a law that sets the maximum time after an event within which you can file a lawsuit. In the context of contracts, it determines how long you have to bring a legal claim for breach of contract.
Typical Timeframes
Statutes of limitations for contract claims vary by state and type of contract:
- Written contracts: Typically 4-6 years in most states (some states allow up to 10 years)
- Oral contracts: Generally shorter, often 2-4 years
- UCC claims (sale of goods): 4 years under the Uniform Commercial Code, though parties can reduce this to 1 year by agreement
For example, California has a 4-year statute for written contracts (Cal. Civ. Proc. Code Section 337), while New York allows 6 years (N.Y. C.P.L.R. Section 213).
When the Clock Starts
The limitations period typically begins when the breach occurs, not when you discover it. However, some exceptions apply:
- Discovery rule: In some jurisdictions and situations, the clock starts when you knew or should have known about the breach
- Continuing breach: If the breach is ongoing, the limitations period may reset with each new instance
- Fraudulent concealment: If the breaching party actively hid the breach, the clock may be paused ("tolled")
Can Contracts Modify the Statute of Limitations?
Some contracts include clauses that shorten the statute of limitations. For example, a contract might require all claims to be brought within 1 year of the breach. Courts generally uphold these shorter periods if they are reasonable, though some states restrict how much the period can be shortened.
Red Flags
- Shortened limitation periods (e.g., 6 months or 1 year) that may not give you enough time to discover a breach
- Clauses that define the start date favorably for the other party
- Waiver of statute of limitations protections
When to Consult a Lawyer
Consider consulting an attorney promptly if you believe a breach has occurred, as waiting too long can permanently bar your claim. A lawyer can determine which state's statute applies and whether any tolling exceptions extend your deadline.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.