(1) The parties may modify the limitation periods.
(2) However they may not
(a) shorten the general limitation period to less than one year;
(b) shorten the maximum limitation period to less than four years;
(c) extend the maximum limitation period to more than fifteen years.
1. Basic decision: modifications possible
In some legal systems the power of the parties to modify limitation periods and their effects is restricted out of concern for the weaker parties and, in particular, consumers. A distinction is sometimes made between very short limitation periods, which can be prolonged, and other limitation periods, which cannot be modified or can only be shortened. Since the Principles apply to international contracts between businesspersons who are normally experienced and knowledgeable persons who do not need to be protected, they permit the parties to adapt the limitation periods applicable to the rights arising out of their contracts to their needs in a given case. Restrictions to the parties’ autonomy in this respect may, however, follow from the mandatory rules of the otherwise applicable law (see Article 1.4).
2. Limits of modifications
The possibility nevertheless remains that a party with superior bargaining power or better information may take advantage of the other party by either unduly shortening or lengthening the limitation period. This Article therefore limits the power to shorten the general limitation period by stating that it may not be shortened to less than one year starting from the moment of actual or constructive knowledge, and to shorten the maximum period by stating that it may not be shortened to less than four years. The maximum limitation period and, necessarily, the general period cannot exceed fifteen years.
1. The facts are the same as in Illustration 2 to Article 10.2, except that in their contract the parties provide that the maximum limitation period for all claims based on hidden defects is fifteen years. B’s claim for damages is not yet barred.
2. The facts are the same as in Illustration 2 to Article 10.2, except that in their contract the parties provide that the maximum limitation period for all claims based on hidden defects is twenty-five years and the bridge collapsed after sixteen years. B’s claim for damages is barred, because the maximum limitation period can be extended to only fifteen years.
3. The facts are the same as in Illustration 2 to Article 10.2, except that in their contract the parties provide that the general limitation period in case of harm resulting from the non-conformity of the bridge starts only upon the submission of a written report of experts of an independent engineering firm. After the collapse of the bridge, it is uncertain what the causes were, and it takes two years for the engineering firm to submit its report. The general limitation period begins to run only from the day after the day on which the report was submitted.
3. Time of modification
A modification can be agreed upon before or after the commencement of a limitation period. A modification agreed upon before or after the commencement of a limitation period differs from an agreement concluded after the limitation period has expired. Such an agreement, although too late to modify the applicable limitation period, may have legal consequences either as a waiver of the defence that the limitation period has expired or as a new promise by the obligor.