This post provides a brief summary of the statute of limitations in New Jersey as applied to claims for breach of contract and fraud. A more detailed summary of the law in this area appears in our brief filed in a motion to dismiss a lawsuit alleging breach of contract and fraud resulting from a residential real estate transaction.
Statutes of limitations are enacted to provide certainty for litigants, and to prevent the litigation of stale claims. See Rivera vs. Prudential Property & Casualty Ins. Co., 104 N.J. 32, 39 (1986)(“The purposes of statutes of limitations, oft-repeated by this Court, are two-fold: (1) to stimulate litigants to pursue a right of action within a reasonable time so that the opposing party may have a fair opportunity to defend, thus preventing the litigation of stale claims, and (2) to penalize dilatoriness and serve as a measure of repose.”).
- Six Year Statute of Limitations for Breach of Contract – Non Sales Contracts
In New Jersey, a litigant has 6 years to file suit for breach of a non-sales contract; e.g., a contract that does not involve the sale of goods. See N.J.S.A. 2A:14-1. New Jersey law says “determination of the accrual of a cause of action is an issue for the court.” Baird v. American Medical Optics, 155 N.J. 54, 65 (1988). The plaintiff bears the burden of showing that his or her claim is not barred by the statute of limitations. Silverman v. Lathrop, 168 N.J. Super. 333, 337 (App. Div. 1979). “A cause of action for breach of contract accrues the moment the right to commence an action comes into existence, and occurs when one party has, by words or conduct, indicated to the other that the agreement is being repudiated or breached.” N.J. Div. of Taxation v. Selective Ins. Co. of Am., 399 N.J. Super. 315 326 (App. Div. 2008)
- Four Year Statute of Limitations for Breach of Contract Sales of Goods
New Jersey provides a 4 year limitations period to file suit for breach of contract involving the sale of goods/merchandise under the Uniform Commercial Code. See N.J.S.A. 12A:2-725
- Six Year Statute of Limitations for Fraud Claims
New Jersey has a six year statute of limitations for fraud. N.J.S.A. 2A:14-1. The claim accrues on the date of the act or omission that gives rise to the fraud claim, or the date on which the act or omission reasonably should have been discovered. Southern Cross Overseas Agencies, Inc. v. Wah Kwong Shipping Group Ltd., 181 F.3d 410, 413 (3rd Cir. 1999).
The Discovery Rule
Under certain circumstances, it may be unfair to bar a cause of action due to the passing of the statute of limitations where the litigant did not discover the cause of action in time to file the claim within the deadlines period. The “discovery rule” is a judicially created mechanism for applying equity to the application of statutes of limitation by giving the injured party sufficient time to determine they suffered an actionable wrong. The “discovery rule” tolls the application of the statute of limitations “until the injured party discovers, or by exercise of reasonable diligence and intelligence should have discovered, that he may have a basis for an actionable claim.” Lopez v. Sawyer, 62 N.J. 267, 272 (1973).
If you or your business are the subject of a lawsuit where the statute of limitations is in question, please contact our New Jersey litigation attorneys today and we will evaluate your defenses.