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long to seek payment. You may not “sleep on your rights” andthen expect the law to help you collect.The statute of limitations for failure to perform contracts for thesale of goods is four years in most states. For that reason, an action mustbe begun within four years after the contract is broken. The parties mayreduce the period of limitation to not less than one year by the originalagreement. They may not, however, extend the period to more than thelimit set by their state. The time begins to run the moment that the failureto perform occurs. However, a “time out” is called when a creditoris a minor or is mentally ill. These situations “stop the clock” on thestatute of limitations.Example 13. Suppose Olive Briggs breached her contract andrefused to pay $1,000 that she had borrowed from Jill Hamilton.A month later, Jill was declared mentally incompetent and committedto a state mental hospital. Even though she may remain inthe hospital for 10 years, Jill could still bring suit for the moneydue her as soon as she is declared mentally competent andreleased from the hospital. The time of Jill’s mental incapacitywould not be counted in the statutory limitation period.Termination of Technology ContractDaw Technologies helps to build computer semiconductor factories. It wasawarded a subcontract to install a “clean room” system at a semiconductorplant in Utah. The general contractor notified all subcontractors that thecompletion date of the project had been delayed by 18 months. This delaycaused suspension of all work on the project. The cessation of work requiredthe contractor to terminate all subcontracts. The total amount of the subcontractwas $15 million. Daw’s contract with the contractor was conditionedon the building project remaining on schedule. Both parties had agreed thatthe contract would be terminated in the event of a major delay in the project.(Source: TechWeb News, February 24, 2001)Connect Use the Internet to research the law of contract. Can you think of anyscenarios under which Daw Technologies might seek a remedy, even thoughthis discharge is by agreement?234 Unit 2: Entering Into Contracts