Statutes of limitation are deadlines imposed by law regarding breach of contract disputes. They define the date by which a legal action must be filed or be barred for untimeliness.
In the case of a written contract, the statute of limitations is 4 years from the date of breach. In the case of an oral contract, the statute of limitations is 2 years from the date of breach. The limitations statutory period “accrues” (i.e., begins to run) on the date of the breach whether or not the injured party is aware of the breach.
Under certain circumstances, the statutory period is “tolled,” which extends the time for filing the action. The most common example of a tolling is where a party in breach has filed bankruptcy. In such cases, the statutory period is extended between the date of the filing of the bankruptcy and the date of a discharge in bankruptcy (i.e., the date the Bankruptcy Court declares that all unsecured debts against the bankrupt debtor are forgiven by law).
It is not always clear when a breach has occurred or when your statute of limitations will run. You should always speak with an experienced lawyer to determine your limitations period.
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