Limitation Periods for Commercial Claims: Three Years, and How to Restart Them

The periods that matter

• Price of goods sold and delivered, where no fixed credit period was agreed: three years from the date of delivery.
• Price of goods sold on a fixed credit: three years from when the credit period expires.
• Money payable for work done or services rendered: three years from when the work was done or the services rendered.
• On a written contract generally: three years from when the right to sue accrues.
• Cheque dishonour under Section 138: the complaint must be filed within one month of the cause of action arising, which is a far shorter and separate clock.

Acknowledgement restarts the clock

Section 18 of the Limitation Act provides that where, before the period expires, an acknowledgement of liability is made in writing and signed by the party against whom the right is claimed, a fresh period runs from the date of that acknowledgement.

The acknowledgement need not admit the exact amount or promise to pay. It need only acknowledge a subsisting liability. A signed balance confirmation, a signed statement of account, or an email conceding that an amount is outstanding will generally do.

Part payment restarts it too

Section 19 provides that where part payment of a debt is made before expiry, a fresh period runs from the date of payment — provided the fact of payment appears in the handwriting of, or in a writing signed by, the person making it.

A bank transfer with a narration identifying the invoice is better evidence than an unexplained credit, which is a small operational point with a three-year consequence.

What to do about it

Run an ageing report with a limitation column, not merely a days-overdue column. Anything approaching thirty months needs a decision: obtain a written acknowledgement, secure a part payment, or issue proceedings.

Annual balance confirmations, which most businesses treat as an audit formality, are in fact the cheapest limitation management tool available — provided they are signed.

Frequently asked questions

### What is the limitation period for recovering a business debt?

Three years for most commercial money claims, running from the date the payment became due. Where a credit period was agreed, it runs from the expiry of that period rather than from delivery.

### Does an email from the debtor restart limitation?

It can, if it acknowledges a subsisting liability and is signed — which for email generally means attributable to the debtor and sent before the period expired. It need not promise payment or state the precise amount.

### Can I sue on a time-barred debt?

The claim will be dismissed as barred if the defence is raised, and courts are required to dismiss a time-barred suit even if limitation is not pleaded. The debt itself is not extinguished — if the debtor pays voluntarily, the payment is valid — but it cannot be enforced.