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What are Limitation Act Periods and the Latent Damage Act?

Reproduced by kind permission of RICS Construction Journal September 2008

The Limitation Act 1980 governs time limits for bringing different types of legal claims'. The most relevant for the construction industry are those for contractual and tortious (negligence) claims. Contractual claims In law, there are two main, types of contract: a Simple contract and a contract executed as a deed. The latter must state on the face of if that it is a deed and, in the case of a company, must be executed by two directors or a director and the company secretary. A claim made in relation to a simple contract must be commenced within six years of the cause of action. Claims in relation to contracts executed as deeds must be made within 12 years from the date on which the cause of action arises. The date a cause of action arises can vary, but it is generally the, date that the conflict was breached. However, there is a problem with making a claim under a contract; a cause of action may occur some years before the subsequent defect manifests itself, e.g. faulty foundations, leading to cracks in a wall. The potential claimant would therefore not know that the cause of action has arisen and, as a result the full six or 12 year period may not be available by the time the defect appears. Even worse, a potential claimant may run out of time completely before the defect becomes evident. There is a problem a claim under a contract: cause of action may occur some years before the subsequent defect manifests itself. TORTIOUS CLAIMS In the above scenario, the person affected could make a negligence claim. This is because, although there is only a six year time limit for these claims, the cause of action in negligence arises when the claimant actually suffers damage, i.e. when the defect appears. Latent Damage Act 1988. As the damage is suffered when the defect occurs, not when it is discovered, this can be problematic, especially if the defect occurs in a remote part of a building. The 1986 Act assist claimants by preventing negligence claims from being time-barred so long as the claimant brings an action within three years of when the defect was discovered. Despite this, the act imposes a long stop date on all negligence claims; a negligence claim must be commenced within 15 years of the breach of duty, i.e. the laying of the poor foundations. This applies whether or not any defects have appeared or been discovered.

Author ­ Michael Chilton

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Nabarro LLP Registered office: Lacon House, 84 Theobald's Road, London, WC1X 8RW. Nabarro LLP is a limited liability partnership registered in England and Wales (registered number OC334031) and is regulated by the Solicitors Regulation Authority. A list of members of Nabarro LLP is open to inspection at the registered office. The term partner is used to refer to a member of Nabarro LLP. Disclaimer Detailed specialist advice should be obtained before taking or refraining from any action as a result of the comments made in this publication, which are only intended as a brief introduction to the particular subject. This information is correct on the date of publication. We cannot be responsible for links to external websites that may become broken in the future. © Nabarro LLP 2009

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