Ohio Reduces Breach of Contract Statute of Limitations
Business Litigation Update
Date: July 13, 2012
On June 26, 2012, Ohio Governor John Kasich signed Senate Bill 224, which amends Ohio Revised Code Section 2305.06 and reduces the limitations period for actions based upon a breach of a written contract to eight years. The statute of limitations defines the time period within which a lawsuit must be brought to successfully maintain the action.
The new law shortens the limitations period for breach of contract actions accruing both before and after the effective date of September 28, 2012. For claims that accrued prior to September 28, 2012, the limitations period is the earlier of: eight years from September 28, 2012 (in other words, September 28, 2020); or the expiration of the limitations period in effect prior to the enactment of Senate Bill 224 (15 years from the date of the breach of the contract).
Certain exceptions to the limitations period continue to apply even after the enactment of Senate Bill 224. For example, generally, actions against the state of Ohio or one of its agencies for failure to make a distribution or payment must be brought within five years of when the action accrued and an action for breach of contract for the sale of goods under the Uniform Commercial Code must be brought within four years of the date the cause of action accrues.
The enactment of Senate Bill 224 shortens the time period a litigant has to file a lawsuit for a breach based on a written contract. Parties with contract claims should not delay bringing suit or they may be barred. The result of a shorter limitations period also provides the parties with certainty about the finality of their agreements and may reduce recordkeeping burdens. For contracts governed by Ohio law, the parties will now have greater certainty that a contractual matter is no longer subject to suit in a shorter time. The shorter limitations period may also shorten the time parties retain documents related to a contract. Companies that have previously benchmarked document related retention schedules to the prior 15-year limitation period may consider reevaluating and shortening such retention periods.