What is the time limit for bringing a claim for breach of contract?

The legal position

The general rule. Section 3(1)(a) of the Limitation of Certain Actions Act provides that actions founded on contract (other than a contract made by deed) shall not be brought after the expiry of four years from the date on which the cause of action accrued. The period does not depend on when the claimant became aware of the breach or decided to act. Time ordinarily runs from the date of the breach. In the case of an unpaid invoice, that is the date on which payment fell due. In the case of building works, it is the date of the breach itself, such as the abandonment of the works or the handing over of defective work. That date may be well before the date fixed for completion.

Exceptions and qualifications:

• Contracts made by deed are expressly excluded from the four-year rule. The limitation period applicable to them is not settled.
• Claims for specific performance, an injunction or other equitable relief are excluded from the section (s 3(3)). Such claims are governed instead by the equitable doctrine of laches (unreasonable delay), which may in practice be the more stringent requirement.
• Acknowledgment and part payment. Where the debtor acknowledges a debt or other liquidated claim, or makes a payment in respect of it, the right of action is deemed to accrue on the date of the acknowledgment or payment (s 12). An acknowledgment must be in writing and signed (s 13). The period may be extended repeatedly in that way. A claim that is already statute-barred is not revived by a later acknowledgment or payment.
• Fraud, concealment and mistake. Three situations are covered: the action is based on the fraud of the defendant; a fact relevant to the claimant's right of action was deliberately concealed by the defendant; or the action is for relief from the consequences of a mistake. In each, time does not begin to run until the claimant discovered the fraud, concealment or mistake, or could with reasonable diligence have discovered it (s 14).
• The period of the COVID-19 pandemic. Section 23 excludes from the computation of limitation periods the period commencing on 27 March 2020, as extended by Orders made under it. According to the Legal Aid and Advisory Authority, the excluded period ended on 2 May 2022. For an ordinary four-year contractual claim, that exclusion is no longer of assistance, since every four-year period that overlapped it had expired by early May 2026.

Practical implications

The limitation period should be calculated from the date of the breach. Proceedings should be commenced well within the period rather than on its final day.

Oral promises of payment, protracted negotiations and letters of demand do not stop time from running. Only the commencement of proceedings does so. In the case of a debt or other liquidated claim, a written and signed acknowledgment, or a part payment, causes the period to run afresh.

Recommended steps

The date of the breach should be identified at once, and the expiry of the four-year period recorded, with reminders set well in advance. Pre-action steps take time.

A creditor should obtain any acknowledgment of the debt in writing and signed by the debtor, and should keep a record of every part payment.

Where the expiry of the period is imminent, proceedings must be commenced; further correspondence will not protect the claim. Legal advice should be obtained immediately.

Where a vendor has refused to complete a sale of land, the four-year period does not govern a claim for specific performance, but delay may nonetheless defeat that claim, and the purchaser should act promptly. A claim for damages, or for the return of a deposit, remains subject to the four-year period.