Statute of Limitations for Breach of Contract | Ohio Law
There were times when people living in Ohio would make deals and agreements based on a verbal conversation and a handshake. Some people had wished that this was a workable option for managing a business. In reality, businesses and people should have written contracts. A term of a deal is a lot easier to be proved by a written agreement. Enforcement of written contracts is easier than verbal agreements. However, verbal agreements are still binding in Ohio.
When two parties enter into a contract and one party breaches the agreement, the non-breaching party is entitled to compensation for the damage that has been cause due to the breach of contract. This compensation is dependent on the type of breach and the type of contract.
Statute of Limitation Definition
A statute of limitations is a law that sets the outer amount of time that parties involved in a dispute have to initiate legal proceedings from the date of the breach.
What is Ohio’s statute of limitations?
Anyone who has watched TV shows like “Suits” has surely heard of term statute of limitations, but what does Ohio’s statute of limitations mean? And how does this work?
Ohio’s statute of limitations governs both the contracts that are in writing and the contracts that are not in writing. For written agreements the statute of limitations requires the action to be brought within a time period of eight years of the breach of contract. And the action must be brought within six years of the breach for the contracts that are not in writing. Failure in timely bringing the action might bar the claims of non-breaching party.
There are multiple kinds of contracts. The general rule is that both parties will have to abide with the terms of the contract and not breach it. Which is quite opposite to the reality, so, if you believe that the counterparty that has signed the contract with you contract has breached it, make sure to bring your claim to the court within the time period specified by the law.
The purpose of this is to make sure that the lawsuits are filed within the time period required by the law. This gives a peace of mind to people having potential disputes after years of pass and juries are saved from deciding old claims with lost records and the witnesses’ memories have faded too.
Civil Statute of Limitations in Ohio
The civil statute of limitations law in Ohio are similar as in other states. Its statute of limitations varies between two to eight years considering the kind of lawsuit and the procedures that are involved. Mentioned below are the Ohio’s statute of limitations for various kinds of civil cases:
- Trespass: ORC 2305.09
- Adverse Possession: ORC 2305.04
- Fraud: ORC 2305.09
- Personal Injury: ORC 2305.10
- Slander: ORC 2305.11
- Any other civil action: ORC 2305.14
There is an impact of some other legal concepts when the statute of limitations begins running and if it has the potential to be changed in certain situations.
Ohio Statute of Limitations on Contracts Changing
On March 16, 2021, Ohio Governor Mike DeWine signed into law Senate Bill 13 that amends the Revised Code Sections 2305.06 and 2305.07 to shorten the statute of limitations as follows:
- 6 years for written contracts
- 4 years for oral contracts
- 6 years for consumer contracts
Ohio Statute of Limitations on Debt Collection
Beyond the statute of limitations, filing a lawsuit is common. Many debt collectors will still file a lawsuit against a property owner despite being aware of the fact that the statute of limitations has expired on the case or they had no clue about it because there were no records of the account becoming a charge off. They hope that you not bother defending yourself. Nonetheless, if a creditor or a debt collector that you have paid the debt to, files a lawsuit against you on a debt where the statute of limitations has expired, you can’t just dismiss the case but you also can pursue the debt collector under the Fair Debt Collection Practices Act (FDCPA).
The FDCPA prohibits collectors from collecting a debt that they are not allowed to legally take. It is illegal to file a lawsuit beyond the statute of limitations in some states. If a debt collector has taken this step, you have all the rights to pursue under the FDCPA.
The date when the last element of the cause of action occurred (usually the last payment) is the beginning of the limitation period. But the limitation period is tolled during the time period when the debtor is in jail and is reset every time a voluntary payment is made on a debt due to a written contract.
Payment of Debts after the Statute of Limitations Expires
Once the statute of limitations has expired this bars the creditor from recovering in a lawsuit against the borrower if the borrower raises the defense of Statute of Limitations. This will not erase the debt which is very important for the borrowers to understand, until a judge rules in the case. The creditor might not stop calling even after an expired statute of limitations but they must follow the law and do things accordingly. For instance, a debt collector can still not contact or call a borrower in the middle of the night.
Additionally, a previous debt will stay as a record on your credit report. This might keep people from applying for new loans and even acquiring certain types of employment. However, there are laws concerning how long a debt can stay on these credit reports. The limit for this is seven years for majority of debts according to the Fair Credit Reporting Act (FCRA).
When Does the Timeframe for Filing a Lawsuit Begin?
According to the statute of limitations, the timeframe for filing a lawsuit begins from the time of accrual of the source of action. For instance, when there is a breach of contract, the cause of action comes up and the timeframe for the statute of limitations begins from the time the contract has been broken. That means the last payment date.
Contract law can be very complicated and can have drastic consequences. Hence, businesses should hire an attorney to draft or review their contracts before signing them to ensure that all the rights are protected.
When Statutes of Limitations Are Tolled
The statute of limitations on a debt can tolled in a few instances. One of these instances is when the borrower takes steps to completely avoid the creditor. This does not necessarily mean to ignore all phone calls from the creditor but generally means to take any measure that can prevent the creditor from contacting the debtor at all. For example, if a borrower is familiar with the fact that the statute of limitations will be expiring in six months and he then tries to move to another state in an attempt to avoid the creditor, this can (but not necessary guarantee that) toll the statute of limitations to six months after the debtor moves back to Ohio.
Additionally, in that case if a borrower acknowledges the debt in writing, this can reset the statute of limitations. For instance, if a creditor phoned his borrower and the borrower agrees in writing to pay the money back or makes a $1 payment on the phone towards it. Likewise, whenever a borrower makes an incomplete payment on his debt it can also toll the statute of limitations. Resetting the statute of limitations is only applicable if the agreement of a debt is in writing OR a payment is made on it.
This doesn’t mean that the borrower should wait out the statute of limitations start avoiding to pay their debt. Rather, the debtor needs to be informed of their rights to know if toll the statute and can have an impact on their case or the potential for foreclosure.
Statute of Limitations Verification
After the expiry of statute of limitations, an attempt to file a lawsuit against a borrower is not a prohibited practice, it is just likely to get thrown out of the court if the borrower appears and defends on that basis. However, the courts don’t keep the data and the information about the tracking of different debts and their statutes of limitations. It then falls to the borrower to verify that the statute of limitations has run out on a debt or not.
For this to happen, a borrower should gather as much information as possible regarding the debt from the debt collector to determine what kind of proof they have. This may include bank documents, receipts and any document created during the time when the loan was received. These will demonstrate when the loan was first given, and the last time the payment was made by the debtor.
When a borrower can prove that the statute of limitations has expired on his debt, he can use this in court as a debt defense. The case will be thrown out by the court and the borrower may even be able to sue the debt collector for damages under the FDCPA.