Contracts play an important part in commerce, whether it's consumer transactions or business-to-business dealings. Although state laws generally support the validity of contracts, both written and oral, legal limits are placed on contracts. One such limitation is the amount of time available to file a lawsuit to enforce a contract after it is breached, commonly referred to as the statute of limitations. In North Carolina, the statute of limitations for contracts varies depending on the circumstances under which the contract was made.
Three-Year Statute
The statute of limitations that generally applies to filing lawsuits in North Carolina is the three-year statute set forth in Section 1-52 in the General Statutes. Subsection (1) states that this limitation period applies to "a contract, obligation or liability arising out of a contract, express or implied." This includes both written and oral contracts, as well as open-ended accounts involving a credit card or charge card. Once the contract is breached, a lawsuit to enforce it must be filed within three years from the date of breach or it will be barred.
Two-Year Statute
Subsection (1) of Section 1-52 also indicates exceptions exist to the three-year limitation period on contract lawsuits. A significant exception is for contracts referred to in General Statute Section 1-53(1), which include any "contract, obligation or liability arising out of a contract, express or implied" with a "local unit of government." This section limits lawsuits to enforce these contracts to only two years. Therefore, a person intending to sue the government in North Carolina for breach of contract must act more diligently or risk being barred from enforcing the contract.
Ten-Year Statute
Another exception to the three-year limitation period is for contracts made "upon a sealed instrument." Subsection (2) of General Statute Section 1-47 specifies a 10-year limitation period for filing a lawsuit to enforce such contracts. A "seal" can refer to a literal marking on the contract such as a wax impression or a raised embossing, and it can also refer to including the words "signed and sealed" or designation "(SEAL)" next to the signature line on the contract. Given that this manner of executing a contract extends the general statute of limitation an additional seven years, this type of contract should not be signed without the advice of an attorney.
Four-Year Statute
North Carolina law also specifies a special statute of limitations for contracts subject to the provisions of the Uniform Commercial Code-Sales in the General Statutes Sections 25-2-101 to 25-2-725. These statutes apply to contracts for the sale of goods or merchandise. In the event of a breach of such a contract, subsection (1) of General Statute Section 25-2-725 gives the aggrieved party four years to file a lawsuit.
