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What is the Statute of Limitation on a Contract?

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Contract statute of limitations can have several meanings, but the gist is that any legal complaints filed regarding something in a contract must be filed within a certain amount of time, which varies by state. There are several reasons statute of limitations are in place, one of them being that it is a way to ensure fresh evidence and witnesses. Here you will find three examples of contract statute of limitations at play.

Debt
The contract statute of limitations on a debt varies across states and can range from three to five years. It is often confused with how long a debt can stay on your records, which is commonly seven to 10 years. This statute of limitations is reset every time a debt payment is made or after any communication that ensures payment. Not all debts are protected by a statute of limitations. These include car payments, settlements, child support, taxes and student loans.

Sexual Harassment Cases
Another case where the contract statute of limitations is extremely important are when it comes to sexual harassment. In the 2005 case of aDaimlerChrysler worker who was sexually harassed by a coworker, she was unable to to get the court to rule in her favor. This is because her employment application, which she signed and serves as a contract between employer and employee, stipulated that she could not file a complaint against the company after six months of any incident. In summary, it did not matter that her coworker had groped her, then later made a vulgar gesture to her in a cafeteria--she was past the statute of limitations.

Breach of Contracts
Depending on state, a statute of limitations on a contract breach can be several years. For example, in Michigan the length of time is six years. In one example of this contract statute of limitations at play, landowners who contracted out land to oil drillers in Michigan filed for breach of contract because actions weren't taken to ensure the safety of the site. However, the case was filed after the initial breach, so it was considered a moot point. Plaintiffs may try to say that the statute of limitations starts at point of discovery, but in this case the misconduct was considered a contractual concern and thus held to the six-year statute of limitations.

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