The Six-Year Shadow: How Limitation Periods Quietly Decide the Fate of Contract Debts

Most commercial disputes are fought on the facts: what was agreed, what was delivered, what was paid. A quieter class of dispute is decided by the calendar. A debt may be undeniable, supported by signed paperwork and a clear paper trail, and yet the creditor's ability to recover it can expire simply because too long has passed. Limitation law is rarely the most interesting part of a file, but it is often the most consequential.

This article explains how limitation periods operate for ordinary contract debts across the UK, how they can be restarted, and where the common assumptions tend to go wrong. It is general explanation rather than advice on any particular claim; limitation questions are fact-specific and the consequences of getting them wrong are usually one-sided.

Why the Clock Matters More Than the Argument

English law does not put a permanent stamp on a debt. Under the Limitation Act 1980, a claimant has a fixed window in which to bring proceedings. Once that window closes, the debtor gains a defence — and a complete one. The right does not vanish in the way many people assume, but the remedy does, which for practical purposes is the same outcome. The court will not raise the point of its own motion; it must be pleaded by the defendant. A debtor who overlooks the defence pays. A creditor who overlooks the deadline generally does not recover.

Because the point is procedural, it can sit unnoticed in the background of a file for years while correspondence continues, meetings are postponed and assurances are exchanged. It becomes urgent only when a claim is finally issued and the defendant's solicitors reply with a two-line defence and a reference to the 1980 Act.

The Two Clocks: Six Years and Twelve

For a simple contract — the ordinary commercial agreement, purchase order, engagement letter or oral arrangement — the period is six years from the date the cause of action accrued. Where the obligation is contained in a deed, the period is twelve. The distinction is formal rather than commercial: a document executed as a deed attracts the longer period, which is one of the few practical reasons parties still take the trouble to execute agreements that way.

Shortened or lengthened periods can arise elsewhere. Personal injury claims have their own three-year rule; certain claims involving land, trusts or latent damage follow different routes. Where the debtor lacks mental capacity or is a minor, the clock may be suspended. Where the claim has been concealed by fraud, or the claimant acted under a mistake, time may run from discovery rather than from the original event. These are exceptions, and they are narrower in practice than litigants often hope.

When the Clock Actually Starts

The trigger is the date the cause of action accrues, which for a debt means the date payment fell due. That is not necessarily the date on the invoice was raised, the date the goods were delivered or the date the creditor first noticed the problem. It depends on the terms: payment on delivery, payment thirty days from invoice, payment on completion of a project all produce different start dates. Where a contract provides for payment "on demand", the position is more nuanced still, and long delays in making the demand can themselves create difficulty.

For instalment arrangements, each instalment carries its own clock. A creditor chasing a three-year-old arrears schedule may find that some instalments are comfortably within time and others are not. This is one of the reasons a running account with a longstanding customer should be reviewed line by line rather than in aggregate.

What Restarts the Clock — and What Does Not

Sections 29 and 30 of the Limitation Act 1980 provide that an acknowledgment of the debt, or a part payment towards it, causes time to run afresh from the date of that acknowledgment or payment. The requirements are strict but undemanding: the acknowledgment must be in writing and signed by the person making it, or by an agent acting on their behalf. It need not say "I acknowledge the debt" or admit liability in terms. A short email confirming that an invoice is outstanding and will be settled when funds allow can be enough.

A token payment of even a nominal sum has the same effect, provided it is made in respect of the debt. This is why debtors are so often advised not to send a goodwill payment "to keep things friendly" without taking advice first, and why creditors sometimes suggest one.

What does not restart the clock is equally important. A creditor's invoice, statement, reminder letter or chase email has no effect at all: the clock is only reset by something emanating from the debtor. Correspondence marked "without prejudice" is generally inadmissible in litigation, which makes it an unreliable foundation for an acknowledgment, however clear its wording. Silence never assists either party.

Scotland's Shorter Clock

Scotland operates a different regime. Under the Prescription and Limitation (Scotland) Act 1973, most contractual obligations are extinguished after five years if no relevant claim has been made and no relevant acknowledgment given. The consequence is stronger than in England and Wales: the obligation itself is extinguished, not merely the remedy. Acknowledgment must again be in writing and signed, and the interruption rules differ in detail. A creditor in England dealing with a Scottish customer, or a Scottish business dealing with an English supplier, should not assume the six-year rule travels with the contract.

What Creditors Should Diarise

A workable discipline has three parts. First, record the accrual date for each debt, not the invoice date, and calculate the expiry from there. Second, put the expiry date in the diary with a warning at least six months ahead, so that decisions about proceedings are made deliberately rather than in a rush. Third, keep a clear record of any acknowledgment or part payment received, with the date and the document, because that evidence may later be the difference between a live claim and a dead one.

Where the relationship is worth preserving, a written standstill agreement can suspend the clock by consent. These are common in commercial negotiations and are usually short and uncontroversial, but they must be documented properly; an informal understanding that "we'll sort it out after the busy period" is not the same thing.

What Debtors Should Avoid Writing

For a debtor, the risk is symmetrical and easier to stumble into. A courteous reply acknowledging that money is owed, a promise to pay once a customer settles, a partial payment offered in good faith: each can revive a claim that was close to expiring. Debtors who believe that ignoring correspondence makes a debt disappear are half right — time does eventually bar the remedy — but the strategy only works if nothing is written and nothing is paid in the meantime. Where a letter arrives on a debt that may already be old, the sensible course is to establish the dates before replying at all.

The Myths Worth Discarding

Three assumptions account for a large share of the losses. The first is that ignoring a claim makes it go away; it does, but only after six years, and any engagement during that period resets the calculation. The second is that sending an invoice or reminder keeps the claim alive; only the debtor's words or money can do that. The third is that a part payment is a harmless gesture. It is, in fact, a legally significant act.

Limitation is not a technicality bolted onto the law of obligations. It is a structuring principle, and it rewards the party who keeps dates in order. On a file worth arguing about, that is rarely the party who assumed the paperwork could wait.