In New Jersey, the easiest way to get tripped up in filing a breach of contract lawsuit is to misconstrue the applicable statute of limitations. As a general rule, lawsuits for breach of contract in New Jersey must be filed within six (6) years of the date the cause of action accrues. See N.J.S.A. 2A:14-1. However, clients and practitioners must be mindful of the shorter four (4) year limitations period applicable to filing breach of contract claims for sales of goods that fall under the ambit of the Uniform Commercial Code. See N.J.S.A. 12A:2-725 [1]. In fact, N.J.S.A. 2A:14-1 expressly states: “This section shall not apply to any action for breach of any contract for sale governed by section 12A:2-725 of the New Jersey Statutes.”
As set forth in N.J.S.A. 12A:2-725(a)(1) [1]: “An action for breach of any contract of sale must be commenced within four years after the cause of action has accrued. By the original agreement the parties may reduce the period of limitation to not less than one year but may not extend it.”
The statute further clarifies that a cause of action accrues “when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.” N.J.S.A. 12A:2-725(a)(2) [1].
This important distinction between contracts involving sales of goods versus other types of contracts (such as service contracts or other business contracts) should not be overlooked when it comes to pursuing enforcement against the non-performing or breaching party to the contract. Absent some equitable circumstances, the failure to timely file suit within the applicable statute of limitations period may result in permanently extinguishing the claim.
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LoFaro & Reiser, LLP represents businesses and individuals in breach of contract lawsuits in both the Superior Court of New Jersey and in the United States District Court for the District of New Jersey.