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Litigation and arbitration: Extending the date of performance changes the statute of limitations

Litigation and arbitration: Extending the date of performance changes the statute of limitations

As a matter of contractual freedom, parties have the right to postpone the date of payment even when the due date has already passed. This is often done, for example, by extending the payment of an already due claim into instalments. Doubts have arisen as to how to calculate the statute of limitations of claims in this situation - from the moment of expiration of the original or deferred time limit?

The Supreme Court ruled (III CZP 88/19) that a change in the time limit for the performance also changes the beginning date for calculating the statute of limitations. In its view, the prohibition on modification of statutory limitation periods cannot be treated as a limitation of the right to contractually determine by the parties the claim's due date, but rather as a prohibition on changing such periods, e.g. by extending them.

A contrary argumentation would lead to an unjustified restriction of the principle of freedom of contract and would cause negative consequences both for the creditor and the debtor. Within the implementation of this principle, the parties may unanimously renew an obligation and discharge a debt, and there are no grounds for treating a change in the due date differently.

The creditor, for fear of the expiration of the original statute of limitations, would have no interest in entering into a settlement agreement and contractually postponing the payment, which would adversely affect the debtor. In order to avoid expiration of the statute of limitations, the creditor would be forced to pursue the claim in court, despite the possibility of an agreement with the debtor on postponing the payment.

Should the statute of limitations be deemed to run from the original due date, by extending the due amount into instalments the creditor would expose himself to the statute of limitations, and at the same time, due to the postponement of payment, he would not be able to effectively demand payment of the claim in court before that date.

The expiration of the limitation period acts as a sanction to the creditor who does not exercise his right to claim the due performance. However, if the parties, within the scope of their contractual freedom, extend the payment into instalments that go beyond the original limitation period, there is no legal justification to draw negative consequences against the creditor.



Anna Szymielewicz

Lawyer

Anna Szymielewicz

Attorney-at-law, Senior Counsel

Anna Szymielewicz

Contact:

Rondo ONZ 1
00-124 Warsaw