Time Issues in Contract Law

This page discusses time limitations in general in the realm of contracts. It's all about how long you can claim your rights, time barriers and their effects.

 When am I in default? When is a payment late?

That depends. As an example, consider your rental agreement. The clause on payment will usually say something likeTime in Law “rent must be paid by the 3rd of the month”. If you pay on the fourth you are in default. If your contract has no such clause, then you will be in default one month after receiving the bill, if you have not received a prior reminder (§286 III 1 BGB). Be sure the bill fails to inform you that you will be in default after thirty days; otherwise, he will have to send you a reminder.

I forgot to pay a bill and now I have gotten a reminder with an additional default charge. Is that legal here?

Again, it all depends. By law, your creditor can collect damages and / or default interest at 5% (8% in business matters) above basic interest rate p.a. (§247 BGB). This basic interest rate is set by law and is subject to change every half year. As of the second half year of 2002, the basic interest amounts to 2,47%. This means the default interest is now at 7,47%. Outside of such interest charges, courts usually accept a flat charge of € 15 to 20 on damages without demanding any proof. Anything more is subject to proof. If your contract has a section about arrears, anything is allowed within normal ethical and legal limitations.

How much time do I have to assert my warranty rights?

The law grants you two years. The manufacturer may grant you more time. But the statutory period is the minimum. Also consider reading following article directly related to this question: "Guarantee vs. Warranty".

How long does it take until claims are time-barred (verjährt sein)?

Generally, the limitation period (Verjährungsfrist) is three years (§195 BGB). Thirty years, however, is the period for

  • claims on return of property,
  • non-appealable claims, and similar claims,
  • claims in family law (except for running alimony or support),
  • claims in estate law.
What does this mean that a claim is time-barred? May I not go to court any more? Have I lost my claim?

No, you have not lost your case in court! The court does not monitor this defense ex officio. The debtor must raise it during the proceedings. Therefore, filing a case in court is like a game of poker. Will the debtor defend himself? And if so, will he hire a lawyer? In the case, the debtor represents himself and does not defend with time barring of the claim then you will win the case.

Tagged under: Companies, Business Law,
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