Limitation of Actions Consultation - Law Commission

PART III
STARTING DATE, LENGTH OF PERIOD,
DISCRETION TO DISAPPLY AND LONG-
STOP: CONTRACT AND TORT
1. BREACH OF CONTRACT
3.1 In general 1
the limitation period for an action founded on a contract starts on the
date when the cause of action for breach of contract accrues. In an action based on
a simple contract section 5 of the 1980 Act provides that no action shall be
brought “after the expiration of six years from the date on which the cause of
action accrued”. In an action upon a specialty section 8 provides that (subject to a
shorter period being prescribed by another provision) 2
no action shall be brought
“after the expiration of twelve years from the date on which the cause of action
accrued”. Actions on specialties include causes of action brought in respect of
contracts executed as deeds. 3
3.2 A cause of action for breach of contract accrues as soon as the breach occurs. 4
The
commencement of the limitation period is therefore independent of when damage
arises. This may be justified on the basis that the plaintiff is entitled to sue
immediately on the happening of the breach. However, coupled with the absence
of any general provision for the extension of time in contract cases where the
breach is not immediately discoverable, it tends to make actions in contract
become time-barred rather earlier than actions in the tort of negligence based on
the same facts.
3.3 When breach occurs depends on the structure of the contractual obligations. It is
important to distinguish “once and for all” and “continuing” breaches. An
obligation can require once and for all performance on a particular date, or within
a period. Once and for all breach will thus occur on that date or at the end of that
period if the obligation is not performed. 5
In contrast, some obligations (such as a
covenant to keep in repair) continue to require performance until they are
1 In personal injury claims founded on contract the limitation period runs from accrual of
the cause of action or the plaintiff’s date of knowledge, whichever is the later: see paras 3.29
- 3.65 below.
2 Examples of shorter limitation periods include s 9 (actions to recover any sum recoverable
by virtue of any enactment), s 19 (actions to recover rent) and s 20 (actions to recover
money secured by a mortgage).
3 The requirement of a seal for valid execution of a deed by an individual was abolished by
the Law of Property Act (Miscellaneous Provisions) Act 1989, s 1(1)(b). However, sealing
is still necessary in the case of corporations sole and aggregate. For a recent discussion see
Aiken v Stewart Wrightson Members Agency Ltd [1995] 1 WLR 1281, affirmed [1996] 2
Lloyd’s Rep 117. See para 7.11 below.
4 See Gibbs v Guild (1882) 9 QBD 59.
5 See generally Chitty on Contracts: General Principles (27th ed 1994) para 28-022; J W Carter,
Breach of Contract (2nd ed 1991) pp 425 - 432.
26