Glossary · Legal and regulation
Limitation period
Also called Statute of limitations
A limitation period is the time limit for suing over an unpaid debt. After it ends, the claim usually can’t be enforced in court.
Every legal system sets a deadline for bringing a claim. Miss it, and the debtor can defeat the claim simply by pointing out that it is too late.
The periods differ. In England and Wales, claims for contract debts generally have six years from when payment was due, and a written acknowledgment or part payment by the debtor restarts the clock. In Germany the standard period is three years, running from the end of the year in which the claim arose. In the Netherlands, claims for payment are generally time-barred after five years. In the US, each state sets its own limits, which also depend on whether the contract was written.
Few B2B invoices get anywhere near these deadlines, but old disputed balances and forgotten small debts can. A debt that is years old needs a decision before the deadline passes, not after.
Example
An English firm finds an unpaid £3,000 invoice that fell due five and a half years ago. It has about six months left to issue a claim, unless the customer acknowledges the debt in writing, which would restart the six years.