Statute Of Limitations

Updated on March 27, 2024
Article byWallstreetmojo Team
Edited byWallstreetmojo Team
Reviewed byDheeraj Vaidya, CFA, FRM

What Is Statute Of Limitations?

A statute of limitations is a legal provision for a specific amount of time that can pass before legal action can be filed. The action typically takes a set amount of time following the events that gave rise to the claim, after which legal proceedings cannot be filed as per the statute of limitations law.

Statute of Limitations Meaning

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Statutes are passed to defend people from lawsuits brought after the witnesses have vanished, the proof has been destroyed, or the memory has faded. This helps in preventing false or unfair accusations and convictions. In addition, this could provide defendants with a fair chance, especially in cases where there is no recording of formal statements.

Key Takeaways

  • A statute of limitations is a rule of law that restricts how much time can pass before initiating a lawsuit and start proceedings. The time frames may change depending on which state one resides in and the type of issue involved.
  • The statute of limitations avoids unfair or false convictions for evidence loss, memory lapse, etc.
  • The statute of limitations may face a temporary toll or suspension, such as in cases involving a minor.

Statute Of Limitations Explained

The statute of limitations sets the deadline or timeframe for bringing a lawsuit to trial. Most cases have deadlines by which people need to file them. The legal claim is no longer valid if the statute of limitations on a case “gets over.” Depending on the legal claim one possesses, there are different time limits during which one can initiate a lawsuit.

The reason why they exist is to save the defendants from unfair prosecution by legal action. This could happen as a result of evidence theft or loss. These statutes also prevent witness tampering and memory lapses caused by time differences. Expecting a person to recall every detail of an incident years ago would be unfair, especially if there were no records of formal statements as part of the investigation.

For civil cases, the statute of limitations includes a diverse array of legal matters, including personal injury, breach of contract, or property damage. The timeframe typically commences from the date the cause of action arises. In contrast, for criminal offenses, the statute of limitations varies widely depending on the severity of the crime, with certain heinous offenses exempt from these limitations.

Understanding and adhering to the statute of limitations is crucial for both plaintiffs and defendants. For plaintiffs, it underscores the importance of timely legal action to protect their rights, while for defendants, it serves as a safeguard against enduring legal uncertainty indefinitely.

However, nuances exist within the U.S. statute of limitations. Certain circumstances, such as the discovery of harm or the age of the plaintiff, may alter the commencement of the limitations period. Navigating these intricacies requires legal expertise to ensure a fair and just application of the statute of limitations in the pursuit of justice within the U.S. legal system.

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How Does It Work?

The statutes apply to common life occurrences such as taking out a loan. Credit card debt, mortgage debt, vehicle loans, medical debt, and student loans are typical examples of this. In the case of the statute of limitations on debt, it is the time frame in which a lender can file a lawsuit against the borrower to recover an unpaid debt.

After that period, the lender can no longer sue the borrower to recover it. This is termed “time-barred debt.” Depending on the nature of the loan (a government or private loan), the statute of limitations varies with each state. However, the state usually decides it either by the date of the most recent payment or by the borrower’s default or failure date. In such cases, the date that comes earliest is the limit.

For example, in California, the statute of limitations on debt is usually three to six years; however, in some cases, it may extend to even 15 years. Similarly, in the case of the statute of limitations on medical malpractice, it can be three years from the date of the harm or one year from the day the victim knows or should have known about the injury, whichever is earlier.

The statute of limitations law may face temporary suspension (“tolled”) before resuming their lapse. For instance, tolling could occur if the accused is a minor, is away from the jurisdiction, is imprisoned, or suffers from a mental condition. The statute of limitations resumes whenever the tolling event (such as when the juvenile turns 18, when the defendant returns when they are released from prison, or when the defendant is no longer mentally troubled).

History

The statute of limitations is the foundation for the limitations specified in the codes of countries with civil law. It first emerged in early Roman law. In nations with a civil law system, including the US, general statutes that set deadlines during filing are common. In England, the introduction of limitations on proceedings to recover landed property and those on personal actions did not occur until the 16th and 17th centuries, respectively.

Timeframe

General statutes aggregate civil actions into broad categories and set time limits for various durations. In general, American periods are shorter than those in continental Europe. Similar to how it works in civil actions, the criminal statute of limitations does not begin to run in the instance of a defendant who has hidden or left to avoid being prosecuted. Although statutes designating specific conduct as crimes usually set time constraints for their prosecution, there are no general statutes of limitation applicable to criminal actions in England. The suggested timeframes are arbitrary.

Examples

Now that we understand the basics, history, and timeframe of the U.S. statute of limitations, let us apply them to the examples below to gain a practical overview of the concept and its intricacies.

Example #1

Ben and Dave were business partners in “Bluebell Ice Creams,” California. They got into a quarrel over a new business project. Dave couldn’t persuade Ben that the idea was good. They argued, and it eventually led to Dave hitting Ben. This amounts to a physical assault where the statute of limitations on assault can be taken into consideration.

Despite Dave being his business partner, Ben has every right to file a complaint against him. Ben can report it immediately or at his leisure after recovery. However, according to the statute of limitations by state Californian law, he has to report it within two years. Dave would have no option to report it after the period as the law does not support it.

Example #2

There was a sudden uproar in Nepal demanding the ease of the statute of limitations in cases of sexual violence. The protests began as a rape victim could not file a complaint as the time limit for filing a sexual assault is one year, according to the law.

Breach of Contract

Understanding the breach of contract statute of limitations law not only sets a time limit for legal action but also ensures fairness and efficiency in the resolution of contract-related matters within the U.S. legal framework. Let us discuss them in brief.

  • Commencement: The initiation begins from the date of the alleged breach of contract. The plaintiff must be aware or should have reasonably discovered the breach to trigger the limitations period. The timeframe varies by state, typically ranging from two to six years, depending on jurisdiction and the type of contract within which it has to be reported.
  • Civil Claims:  Plaintiffs must file a lawsuit within the stipulated timeframe. It serves to prevent the pursuit of claims that have become stale due to delayed legal action. It provides legal certainty for both parties involved, encouraging timely resolution or legal action.
  • Exceptions: Some jurisdictions follow the discovery rule, tying the statute of limitations to when the breach was discovered or should have been discovered.Also, parties can sometimes alter the limitations period through contractual agreements.

Statute of Limitations Vs Statute of Repose

Let us understand the differences between the U.S. statute of limitations and statute of repose through the comparison below.

Statute of Limitations

  • Imposes a time limit on initiating legal action after the occurrence of a specific event, such as a breach of contract.
  • Typically begins from the date of the event or when the plaintiff becomes aware of the harm.
  • Aims to ensure timely resolution, prevent stale claims, and maintain fairness in legal proceedings.

Statute of Repose

  • Sets an absolute deadline, unrelated to the plaintiff’s awareness or the occurrence of harm, beyond which legal action is barred.
  • Often triggered from the completion of a specific event, such as the delivery of a product or the completion of construction.
  • Intended to provide defendants with an ultimate cutoff, even if potential issues or harm are not immediately apparent.

Frequently Asked Questions (FAQs)

1. How long is the statute of limitations?

The length of the period allotted differs from case to case and state to state. For example, the limitation period for debt in California typically is four years, three in New York, four in Pennsylvania, four in Texas, and six in Washington.

2. How does statute of limitations work?

They work on the principle of providing time frames. There are particular periods given to respective crimes or causes. This is done to save you from unfair legal proceedings.

3. When does statute of limitations start?

It depends on the case and cause. For statute of limitations on medical malpractice, three years is given. For example, suppose any personal property was lost at a location. The statute is valid for 90 days after leaving the premises.

4. Why do statutes of limitations exist?

Limitation periods are generally established to safeguard potential defendants against unfair trials and other legal actions. The potential for key evidence being lost after a long period is one issue that gives rise to statutes of limitations.

This article has been a guide to What is Statute of Limitations. Here, we explain its history, timeframe, and examples, and compare it with the statute of repose. You can also go through our recommended articles on corporate finance –

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