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What are the statute of limitations for contracts?

On Behalf of | Mar 29, 2022 | Business Law |

All debts have a timeline of when they’re enforceable in Oregon. Creditors can use the courts to force payment during that period. The statute of limitations is different depending on which type of debt it is. Types of debt include an open-ended account, promissory note, oral agreement and written contract.

What’s a written contract?

A written contract is a printed agreement that the lender and borrower both sign. Written contracts are legally binding and enforceable under business law. A written contract sees one party perform a service and the other party agrees to a payment. The terms of a written contract vary from contract to contract.

How do debts become bad?

Once the parties sign the contract, they’re both bound by the terms. After a person defaults on their end by missing payments, the lender may file a lawsuit to pursue payment. A court may make a judgment and find that a person owes the debt. The other party may sue to have wages garnished if they still don’t pay. A court can only enforce what a party owes under the written contract. The statute of limitations starts ticking down on the day of the late payment. The statute of limitations begins with the last payment made. The statute of limitations may begin with debt acknowledgment or payment arrangement. Both parties should keep records of everything.

The statute of limitations

The statute of limitations for written contracts varies with states under business law. The statute of limitations is usually longer for contracts than open-ended accounts. Open-ended accounts include credit cards and lines of credit. The statute of limitations for written contracts in Oregon is six years. A party should contact an attorney to verify the timing of the statute of limitations when another party files a lawsuit.

The statute of limitations will continue to run down as long as there’s no action taken with the debt. Sometimes people may do any activities such as making a partial payment, which resets the statutes of limitations of the written contract. When the statute of limitations resets, the lender has more time for a lawsuit against the other party.