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Swithering Over A Potential Legal Claim? If You Snooze You Lose!

Posted on Jul 04, 2014 by Liina Tulk  | Tags: time bar, limitation, scotland, claims, standstill agreement, prescription,  | 0 Comments

By Neil Morrison, Associate, and Liina Tulk, Solicitor, Dispute Resolution

Introduction

Often many people will feel that their legal rights have been infringed but for many reasons decide not speak to a solicitor either because they don't want to incur costs investigating if they have a valid claim or because they put it off until they feel ready to focus their attention on it. It is often overlooked  by business owners that just like their yoghurts in the fridge, claims have an expiry date. If the claim is not lodged with the Court within the period the law allows then the general position is that it has expired (or 'is time-barred' as lawyers say).  

The rationale behind claims (there are a few types of claim that cannot time bar) having a finite lifespan is that if  there were no time limits then possible claims could arise many years after the event. It would be unfair for an individual or company to be fretting about a potential claim forever. 

Overview of Time bar

The time limit in Scotland for bringing a claim for damages for breach of contract or negligence is five years from the date the loss was suffered flowing from a legal wrong. The legal rules on time bar are found in the Prescription & Limitation (Scotland) Act 1973.

There are exceptions to the general rule. If a party can show they could not have discovered the loss was caused by the wrong (even if they had used reasonable diligence) then the timebar clock will not start running until a later date. The argument often advanced is that the loss was not immediate and only happened at a later date after the wrongful event. Whether the argument that time bar clock does not start running is successful will come down to the facts of the particular case.  

However even if it seems the time bar clock can be extended, it is prudent to err on the side of caution and raise any action as soon as possible (and within 5 years) to limit the risk of the other side taking the time bar point and arguing that the claim has expired.

National Differences

It should also be remembered that countries have differing time bar rules. For example, an unpaid invoice would need to be litigated within 5 years in Scotland. While in neighbouring England, it is 6 years, and in Spain the unpaid invoice could be pursued via Court within 15 years!

How to stop the time bar clock?

Scotland

The clock is stopped once Court proceedings are raised (i.e. the Court Writ has been lodged with the Court, approved and then served on the other party).

England

In England, a Court Writ also needs to be lodged with the Court, approved and then served on the other party. Alternatively, under English law, parties may enter into a Standstill Agreement to stop the timebar clock. This is a contract between the parties whereby they agree that the time bar clock will 'standstill' from the date of the contract until a certain agreed date in the future.

After that date the time bar clock will continue running from where it left off. For example, if four years have passed from the wrongful act at the point when the Standstill Agreement is entered into, then once the Agreement comes to an end, the party looking to bring an action still has another two years left on the time bar clock.

Conclusion

It is sensible to come to a solicitor at an early stage to find out the time bar position of a potential claim than to assume the claim will be fine only to find out later down the line that the potential claim has expired. The phrase 'if you snooze, you lose' is apt for the scenario where someone has procastinated and prevaricated over taking action or simply forgotten for such a long period of time that the relevant time bar limit has expired. 

We have become aware of some non-legal consultants advising their clients that a letter of complaint will stop the time bar clock. Please note a complaint letter sent to the other party will not stop the legal time bar clock. It is frustrating for lawyers to be told of circumstances which would give rise to a claim with reasonable prospects only to be told that the loss suffered was at a time outwith the general time bar limits.

If you have any queries arising from this article, please contact our Dispute Resolution team on 0131 226 8200.

Disclaimer: While every effort has been made to ensure the accuracy of this blog post, it is not intended to provide legal advice as individual situations will differ. No recipients of content in this blog post should act or refrain from acting on the basis of the blog post without seeking the appropriate legal advice on the particular facts and circumstances at issue from a qualified solicitor in their jurisdiction. The blog post is for general information only and is not legal advice. The law changes frequently and varies from jurisdiction and jurisdiction. No solicitor-client relationship is formed nor should any such relationship be implied. If you require legal advice, please consult with a solicitor qualified to practise in your jurisdiction.  Should you be interested in seeking our assistance with a legal matter, please contact the Dispute Resolution team on 0131 226 8200.

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