What is Limitation of Actions?

2020/1/8

The plaintiff should file a lawsuit to the court no later than the legal deadline. If later than the legal deadline, the plaintiff will lose the case. The legal deadline here is defined as limitation of actions.

Certainly, China has the laws and regulations about limitation of actions. The period of limitation of action is 3 years in general. Some special disputes have a longer period of limitation of actions. For example，the period of limitation of actions for international goods trading contract dispute is 4 years. The period of limitation of actions for technology import & export contract dispute is 4 years. However anyway, the period of limitation of actions should not be longer than 20 years.

But when is the starting point of limitation of actions? A limitation of actions should begin when the entitled person knows or should know that his/her/its right have been infringed.

The limitation of actions for a contract dispute should be from the next date following expiration of the obligation performance period if the performance period is clear in the contract. Otherwise, the limitation of actions for a contract dispute should be from the next date following expiration of grace period or from the next date after the obliged person (obligor) refuses to perform.

When and if the limitation of actions is interrupted, the period of limitation of actions prior to interruption should become invalid and the limitation of actions should be started all over again. So, interruption of limitation of actions is a necessary way to protect the clients' right and interest. The interruption of the limitation period is beneficial to future litigation, which adds a path for the parties to protect their rights.

However, the limitation of actions should not apply to the dispute on real actions. For example, both party A and party B own a house jointly, either party can claim to divide the house at any time, but shouldn't be deemed to be later than limitation of actions.

Moreover, the limitation of actions should not apply to the dispute on contract validity. If Party A and Party B have dispute on contract validity, either party can claim to confirm the validity of the contract at any time.

Many parties do not understand what the limitation of action is. We recommend that the clients should consult a lawyer as soon as possible when a dispute cannot be resolved, so as to avoid the loss of the right to sue due to the limitation of action.