20 August 2021
Litigation – Limitation period and recovering debt
My client had a verbal agreement some years ago to do some work for a software development company.
They claim they initially forgot to chase the unpaid invoice, which shows payment terms of 30 days. Now, since they have not been paid, they have started proceedings.
The invoice is dated 71 months before commencing, just inside the 6‑year limitation period.
The services were provided 75 months before commencing, which is outside the limitation.
In the absence of a written contract, when did the cause of action accrue?
Thank you for the question.
Generally, the terms of the contract between the parties will determine when a debt under the contract becomes due. In the absence of any clear contractual terms to the contrary, the action generally accrues when the agreed work is completed rather than when it might subsequently have been invoiced, or when the invoice became overdue.
If the defendant seeks to rely on a Limitation Act defence they will bear the onus of proof on that point. Evidence in support of the limitation question will necessarily also go to the ultimate issue of the existence of any agreement between the parties and its terms.
Regards
Mentor
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