What are the key statutes of limitations relevant for businesses?
Statutory limitation periods refer to the fixed periods of time during which legal proceedings can be brought. Once the time limit has passed, it is no longer possible to lodge a claim, as this will be deemed out of time or 'statute barred'. The limitation periods include the following:
contract claims (including debt) - 6 years
deeds - 12 years
tort (ie a 'civil wrong') - 6 years
personal injury - 3 years
negligence - 3-6 years
fraud - 6 years
defamation - 1 year
When does the limitation period start?
Limitation periods start from the date of the 'cause of action', ie the first time it was possible to lodge a claim (eg due to the relevant facts being known). For example, in the case of an employee developing asbestosis, they may have been exposed to asbestos at work 30 years previously, but it's not until they are diagnosed with mesothelioma (or until there is a clear diagnosis of asbestos-related disease) that the limitation period starts to run.
Specific types of claim
Limitation periods are vital for debt recovery. As a general rule, creditors have 6 years to recover most types of unsecured debts (ie where no security or collateral (eg a house) was taken to secure the debt in case it is not repaid) and 12 years for some mortgage debts. The limitation period generally begins from the point at which an individual (or business) falls into arrears or fails to make a repayment. Lenders or creditors should document the stages of debt so that there is a record of the cause of action.
For more information, read Debt recovery.
The most relevant civil claims include:
Personal injury - the limitation period is typically 3 years (from the date of the injury or date of knowledge, whichever comes later). The legislation provides the right to claim compensation if a defective product causes damage, injury or death.
Medical negligence - the limitation period is 3 years (from the date of the negligence occurred or the date you became aware that the treatment you received was negligent, whichever comes later). If someone dies as a result of medical negligence, dependents of the deceased can claim compensation and in this case, the limitation period runs from the date of death.
Construction - although the limitation period for construction defects is normally 6 years this can be extended to an overall maximum of 15 years from the accrual of damage (depending on the circumstances).
A defamation claim must normally be brought within 1 year from the defamatory statement being made. However, it is possible to extend this time limit in certain circumstances. There may be circumstances where the time limit may be extended due to 'reasonable' delay - where the defamed party did not discover the defamatory remark until a year after it had been made - which demonstrates the flexibility of limitation periods in this regard.
Statutes of limitations in Scotland
In Scotland, contracts are subject to prescription. Prescription is regulated in Scotland by the Prescription and Limitation (Scotland) Act 1973.
5 year prescription period
Prescription is similar to the concept of limitation in that a claim in damages for breach of contract may be brought within 5 years from the date the party’s right of action arose (ie the date when the loss arises and the breach of contract occurs).
20 year prescription period
In addition to the 5 year prescription period, a 20 year period is applied as a ‘long stop’. This means that there is an absolute time limit on when claims can be made. There is no way to extend this time period (ie the claimant cannot say they were unaware of the time limit).
Alternative time periods
There are some important alternatives to the 5 year time period. The following alternatives apply:
personal injury - claims must be brought within 3 years
defamation - 3 years
harassment - 3 years
product liability- 10 years