Impending Revised Statute of Limitation on Claims of 31 December 2004

Serious consequences loom on 31 December 2004 in light of a legal amendment already dating back a long time.

In connection with a regulation modernizing the law of contracts, German law affecting the statute of limitations was thoroughly revised as of 01 January 2002. In particular the regular term for the statute of limitations was shortened for claims in § 195 Federal Legal Code (FLC) from 30 to only three years. This will take effect on 31 December 2004.

Based on the transitional dispositions (see Article 229, § 6, Para. 4, 1st sentence ECFLC), the brief statute of limitations also affects old claims for statute of limitation terms already ongoing. Yet the shorter term only begins with 01 January 2002. Thus certain pending claims will terminate on 31 December 2004, should the situation arise, although their original statute of limitations term would have expired much later. Included among categories affected are compensation claims from deliveries and services between merchants, numerous contractual claims between private persons, demands for repayment of loans, claims for recovery of damages due to contractual violations or indebtedness in case of a contract expiring, guarantees, and sureties, as well as capital investment or profit claims based on company law.

Therefore, we urgently recommend reviewing whether such claims exist in your case. To the extent that these took effect before 01 January 2002 and the previous statute of limitations had not yet been demonstrably suspended or interrupted, you must see to it that a legal plea in the sense of § 204 FLC occurs before 31 December 2004 to avoid loss of rights. Obviously a written acknowledgment of debt can also be agreed to with the contractual partner in which he expressly waives invoking the statute of limitations. Naturally this can be subjected to an ultimate binding test only in each individual case.



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