(1) The expiration of the limitation period does not extinguish the right.
(2) For the expiration of the limitation period to have effect, the obligor must assert it as a defence.
(3) A right may still be relied on as a defence even though the expiration of the limitation period for that right has been asserted.
1. No extinction of the right
The expiration of the limitation period does not extinguish the obligor’s right, but only bars its enforcement.
2. Expiration of the limitation period must be raised as a defence
The effects of the expiration of the limitation period do not occur automatically. They only occur if the obligor raises the expiration as a defence. The obligor can do so in any proceedings in accordance with the applicable law, and also outside of proceedings by invoking the expiration of the limitation period. The existence of the defence can also be the subject of a declaratory judgement.
1. A purchases goods from B. Part of the purchase price is due on 1 April and is not paid. Thirty-eight months later, B files a complaint against A. A does not invoke the expiration of the limitation period, nor does it appear in court, and B moves for a default-judgment. Judgment will be for B, since A did not raise the expiration of the limitation period as a defence.
3. Use of a time-barred right as a defence
Since under the Principles the expiration of a limitation period does not extinguish the right, but only gives a defence that must be asserted by the obligor (paragraphs (1) and (2)), it follows that the obligee’s right still exists, although a claim for its performance may be barred by the obligor’s assertion of the expiration of the limitation period. It can, therefore, be used as a defence, e.g. as grounds for the retention of performance by the obligee (paragraph (3)).
2. A leases a printing press to B for ten years. Under the contract A is obliged to maintain the press in working condition and to undertake repairs, unless a defect is caused by B’s negligence in operating the machine. The machine breaks down, but A refuses to do the necessary repairs. B, after futile requests and negotiations with A, has the repairs done by another company and asks A to pay the necessary costs. A does not react, and B does not pursue the matter. Five years later, at the end of the lease, B again requests payment of the costs of the repairs. A refuses to pay and invokes Article 10.2(1), requesting the return of the printing press. B is entitled to damages for breach of contract and to withhold delivery of the press.