Meaning
Legal concept in German and civil law systems that refers to the expiration of a claim due to the passage of a specific period of time. Under the doctrine of verjaehrung, the debtor has the right to refuse performance once the limitation period has expired. This concept promotes commercial certainty and protects market participants from stale claims where evidence is no longer available.
The standard limitation period for commercial contracts is three years, starting from the end of the year in which the claim arose and the claimant became aware of the breach.
Limitation Period
Depending on the nature of the claim and the underlying contract, the duration varies. In construction contracts or warranty disputes, the period is typically longer, often extending to five years.
Interruption Mechanism
The limitation period can be suspended or interrupted by formal legal actions or negotiations. For example, filing a claim in court or initiating an arbitration proceeding will interrupt the period and cause it to start anew.
Procedural Defense
The defense of limitation must be actively pleaded by the defendant, as the court or tribunal will not raise it on its own initiative. This requires joint venture partners to monitor deadlines closely and secure tolling agreements when negotiations are ongoing.
