Contract Term Shortening Statute of Limitations Must Be Clear, Unambiguous, Reasonable and Fair

On December 13, 2017, Justice Paris of the Onondaga County Commercial Division issued a decision in Jesiolowski Enters., Inc. v. Data Key Holdings, LLC., 2017 NY Slip Op. 52025(U), holding that a contract term limiting the time in which to assert a claim was unenforceable because it was not clear, unambiguous, reasonable and fair, explaining:

Although parties to a contract may agree to limit the period of time within which an action must be commenced to a shorter period than that provided by the applicable statute of limitations, the intent to abbreviate the limitation period must be set forth in a clear and unambiguous manner. Moreover, the abbreviated period must not be unreasonably short or unfair.

Here the APA and the ICA must be read and interpreted together as they were executed contemporaneously and are both integral and non-dispensable instruments of the transaction. When doing so, the two year duration period set forth in the ICA renders the one year shortened limitation period provided for in the APA as ambiguous, unreasonably short, and, therefore, unenforceable.

(Internal citations omitted).

It is not unusual for the statute of limitations to be an issue in complex commercial litigation. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding whether claims are barred by the statute of limitations.