Three deadlines, five interruptions, and one mistake every second entrepreneur makes.
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Are you sure you still have time to file a lawsuit? Where exactly do you start counting the statute of limitations?
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Did you know that a simple letter to a debtor can extend the statute of limitations for another three years—and when does this work?
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What happens if I file a claim after the deadline has expired—and can it be reinstated?
The entrepreneur filed a lawsuit to recover a debt of 22,000 euros under a supply contract. The last payment was three years ago. The lawsuit was filed today.
During the trial, the defendant claimed the statute of limitations had expired. Three years had passed for the commercial debt. The court agreed. The claim was dismissed. The money was lost.
The plaintiff had correspondence, a contract, and invoices. Everything confirmed the debt. But time ran out.
Three deadlines you need to know
Ten years is the general term. Article 1895 of the Civil Law of Latvia: all obligatory rights not excluded from the statute of limitations cease if not exercised within ten years. Applies to transactions between individuals who are not merchants.
Three years – commercial transactions. Article 406 of the Commercial Law: claims arising from commercial transactions expire after three years. This applies to all transactions where at least one party is a merchant (registered company or sole proprietor). This is a key deadline for most entrepreneurs.
One year – special cases. CMR Convention carriage contracts, some insurance requirements. If you work in logistics, this is critical.
From what moment should we count?
Article 1896 of the Civil Code: the limitation period begins to run from the day on which the right of claim arose - that is, from the moment when the debtor was obligated to fulfill the obligation and did not fulfill it.
In practice, this means: if the contract stipulated payment by January 31st, the deadline begins on February 1st. Not the day the contract was signed. Not the day the invoice was issued. But the day the obligation was breached.
The most common mistake is to calculate the period from the contract date or the last contact with the debtor. This is incorrect.
Five situations when the term is interrupted and starts over again
First: the creditor sent the debtor a formal demand. Whether it’s a claim, notice, or letter demanding payment, if the debtor receives it, the statute of limitations is interrupted. This is Article 1905 of the Civil Code. The period begins anew from the moment the demand is received.
Second: the debtor has acknowledged the debt. Any action that indicates acknowledgment—a partial payment, a written promise to pay, or the signing of a reconciliation report—interrupts the deadline. Even a partial payment of one euro restarts the three-year countdown.
Third: signing a reconciliation statement. If the debtor signs a reconciliation statement, it acknowledges the debt and interrupts the statute of limitations. This is why reconciliation statements have legal significance.
Fourth: filing a lawsuit. Natural interruption—from the moment the lawsuit is filed, the running of the time limit is suspended for the entire duration of the proceedings.
Fifth: Commencement of settlement negotiations. If the parties have formally commenced pre-trial settlement negotiations, this may serve as grounds for interrupting the statute of limitations, depending on the circumstances.
A real case
The company supplied construction materials to the contractor for three years. Gradually, a debt of 38,000 euros accumulated. The creditor waited, hoping the contractor would pay up once it received money from its clients.
Two years and eight months later, the creditor’s lawyer reviewed the situation and warned: the first deliveries would expire in four months. An official demand was immediately sent, calculating the debt for each invoice.
The debtor received the demand—the period for payment was interrupted for all amounts and began anew. The lawsuit was filed again two months later, this time with ample time. The court awarded the full amount.
What can’t be done with a statute of limitations
The period cannot be extended by contract. Article 1894 of the Civil Code: a contract cannot establish a longer limitation period than that provided by law. If a contract states “a five-year limitation period” for a commercial transaction, this clause is null and void. Three years apply.
A short period can be established. Parties have the right to shorten the limitation period by agreement, but only if this complies with the principle of equality of the parties. In consumer contracts, such terms may be deemed unfair.
Three steps to take now
First: compile a list of debtors and the dates they became due. Calculate the due date for each. This takes an hour and can save hundreds of thousands of euros.
Second: for debts where the statute of limitations expires within six months, immediately file formal demands. This interrupts the statute of limitations and gives you another three years.
Third: establish a company policy: for any debt older than two years, a demand or lawsuit is automatically sent. Don’t wait for the problem to resolve itself.
The law makes no exceptions for those who waited. Time is the only resource that cannot be regained once it’s expired.
This article is for informational purposes only and does not constitute legal advice.