Statutes of Limitations

Business Law Notes

Fall 2002 Edition



By M. Blen Gee, Jr.

As a business owner you may be aware that the basic North Carolina statute of limitations for a breach of contract claim is three years. You may also know that you normally have three years to bring a claim for damages arising from negligence. But, three years from when? Are there other time limitations that may apply? How long do you really have before you must file suit?

In most cases you will have a number of years to bring a lawsuit on a claim that your company may have. However, in a surprisingly large number of circumstances, you may find that an unusually short time limitation may leave you standing empty handed at the courthouse door. The only safe thing to do is to consult early on with your attorney to determine exactly how much time you have to bring suit.

Sometimes time limits are amazingly short. For example, if a potential defendant dies, you only have three months from the first publication of the creditor’s notice to submit a claim to the deceased person’s estate. The time period for challenging many government actions can be as short as thirty days. Claims for slander and liable have a one year statute of limitations. The normal time period for bringing a claim for injury arising from negligence is three years. However, if someone is killed as a result of negligence, the wrongful death claim must be brought within two years.

The complexity of statutes of limitations is compounded by a number of other factors. For example, the statute of limitation for many claims runs from the date of “discovery.” However this is subject to a “discovered or should have discovered” rule. A court could easily find that you should have discovered your damages months or years before the situation actually came to your attention.

Many claims, such as malpractice and construction claims, are also subject to a statute of repose. This means that, even if you have not discovered the grounds for the claim, eventually the passage of time will eliminate your right to bring a suit for damages.

The statute of repose for negligent construction is six years. Calculation of the statute of repose can sometimes be complicated.

To complicate issues further, you may find that a claim brought in another state may have a totally different statute of limitations. Federal law may also affect a statute of limitations.

While some statutes of limitations are surprisingly short, in other situations you may have a surprisingly long time to file suit. Partial payment may extend the statute of limitations. Many contracts and promissory notes are executed with the word “Seal” by the signature lines. This may extend the contract statute of limitations to ten years. The statutes of limitations concerning minors and persons under legal disabilities (such as insanity) usually do not begin to run until the “disability” is removed.

The standard contract statute of limitations in North Carolina is three years; however sales of “goods” under the uniform commercial code have a four year statute of limitations. Business situations that give rise to a breach of contract claim with a three year statute of limitations will frequently also give rise to an unfair or deceptive practices claim which has a four year statute of limitations.

An arbitration clause or other provision in a contract may also affect the amount of time that you have to bring your claim.

If a statute of limitations on a claim is about to run, but you would prefer not to file suit while a settlement is negotiated, your attorney may be able to negotiate a “tolling agreement” which extends the statute of limitations for an agreed upon period.

These are only a few of the dozens of statutes of limitations and other time limitations that may affect your right to bring your claim. Each situation is different and the only way to be confident that valuable rights are not barred by a statute of limitations, a statute of repose or some other time limitation is to present the matter to competent legal counsel – the sooner, the better.


About our Author:


M. Blen Gee, Jr. is an honors graduate of the University of North Carolina School of Law. His areas of concentration include business and corporate law, including sales of businesses; business litigation, including arbitration and mediation; franchise law; automobile dealer law; and insurance company insolvency. Mr. Gee has earned the highest peer-review rating for professional excellence and ethical standards by the national publication Martindale Hubbell.

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