(1) Where the obligor before the expiration of the general limitation period acknowledges the right of the obligee, a new general limitation period begins on the day after the day of the acknowledgement.
(2) The maximum limitation period does not begin to run again, but may be exceeded by the beginning of a new general limitation period under Article 10.2(1).
1. Acknowledgement of rights
Most legal systems permit the running of the limitation period to be altered by acts of the parties or other circumstances. Sometimes acts of the parties or other circumstances “interrupt” the running of the limitation period, with the effect that a new limitation period starts. Sometimes acts or other circumstances cause a “suspension” of the running of the limitation period, with the effect that the period of suspension is not counted in computing the limitation period. According to this Article the acknowledgement of a right by the obligor causes an interruption of the limitation period (see also Article 20 of the UN Limitation Convention,).
2. Commencement of a new general limitation period
The new limitation period that starts following acknowledgement of the right of the oblige is the general limitation period, because by virtue of such an acknowledgement the obligee will necessarily possess the knowledge required for commencement of the limitation period under Article 10.2(1). There is therefore no need to protect the obligee by granting it a new maximum limitation period.
1. A defectively performs a construction contract with B and B informs A of the non-conformities in October without receiving any response from A. Two years later B again approaches A, threatening to bring an action for damages. This time A responds and acknowledges the non-conformity of its performance and promises to cure the non-conformity. On the following day a new general limitation period starts to run for B’s right to damages.
The commencement of a new general limitation period following acknowledgement can take place either during the general limitation period under Article 10.2(1), or during the maximum limitation period under Article 10.2(2). While the maximum limitation period will not in itself begin again, the new general limitation period may exceed the maximum period by up to three years if the obligor acknowledges the right of the obligee after more than seven years but before the maximum period has already expired.
2. B discovers defects in the construction work of A only nine years after completion of the work. The defects could not have been discovered earlier. B threatens to initiate legal action, and A acknowledges the defects. A new general limitation period begins to run on acknowledgement, so that altogether the limitation period amounts to twelve years.
3. Novation and other acts creating a new obligation
Acknowledgement does not create a new obligation, it merely interrupts the running of the limitation period. Accessory rights are therefore not extinguished. Consequently, if the limitation period has already ended, a mere acknowledgement under this Article does not retroactively remove or invalidate the limitation defence.
3. The facts are the same as in Illustration 2, except that B knows or ought to know of A’s defective construction at the time of completion. B approaches A only 7 years later, and A acknowledges the defective performance. B’s claim is nevertheless already barred under Article 10.2(1) and is not revived by A’s acknowledgement.
If the parties want to undo the effects of a completed limitation period, they can create a new obligation by a “novation” or an unilateral act on the part of the obligor, or the obligor can waive the defence of the expiration of a limitation period. The parties can also prolong the duration of the obligee’s right beyond the end of the maximum limitation period under Article 10.2(2).
4. The facts are the same as in Illustration 3, except that A, in order to maintain a profitable business relation, not only acknowledges the defective performance, but promises to cure the defects regardless of any question of A’s liability. This agreement creates a new obligation for A, which is barred only three years later.
5. Nine years after completion B discovers defects in A’s construction work which could not have been discovered earlier. On notice to A, A responds that it will investigate the causes of the defects and will therefore not invoke the limitation period until six months after the experts investigating the defects submit their report. The report is submitted twelve months later, confirming B’s notice of defects. When B asks A to cure the defects, A argues that the maximum period of Article 10.2(2) has expired with the consequence that no claim for damages can be made by B. A’s argument is incorrect if B abstained from initiating judicial proceedings on account of A’s waiver.
4. Interruption of limitation periods modified by the parties
To the extent that the parties have modified the general limitation period under Article 10.2(1), acknowledgement and the commencement of a new limitation period affect the general period as modified. If, for example, the parties have shortened the general limitation period to one year, acknowledgement causes a new one-year period to run.
6. A and B have agreed to shorten the limitation period for claims arising from the non-conformity of A’s performance to two years. After nine and a half years B discovers defects in A’s performance, and A acknowledges its obligation to cure. B has another two years to pursue its claim before it is barred under Article 10.2(1).
Since the obligor can acknowledge more than once, the limited effect of an acknowledgement that causes only the general limitation period to start again can be overcome by a subsequent acknowledgement.
7. A delivers non-conforming goods to B in November. B suffers loss resulting from the non-conformity because its customers complain and return the goods. Since two years later the total amount of loss is not yet clear, B pressures A to acknowledge its liability and in December of that year A complies with B’s request. Two years later, there are still uncertainties regarding the exact extent of B’s obligations towards its customers, some of whom have sued for compensation for consequential damages allegedly caused by the goods. B therefore turns to A again, who acknowledges its obligation to compensate B should the claims of B’s customers be well-founded. B has three more years before its claims against A are barred.