Archive for June, 2009

Statutes of Limitation for Breach of Contracts

Many companies are having trouble collecting on invoices after having rendered the services or delivered goods. But with this economy, what options do you have?

A client’s failure to pay for services rendered or goods delivered pursuant to contract constitutes a “breach of contract.” If you can’t otherwise get your client to pay, then you may sue for the payment in state court in a breach of contract action.

When the amount due is relatively small, it may be easiest and best to file suit in “small claims” or “magistrate” court. Some courts have minimum amounts to sue starting at $1,000 and all have maximums ranging up to about $15,000. In Georgia, the court is called “Magistrate court” and handles money claims of less than $15,000. Even if you’re owed more than the maximum, you can forego the excess and seek the maximum allowed by the small claims court. The filing fee varies by county and can range from approximately $45 to $55, which includes the charge to serve one defendant. An extra charge for service for any additional defendants usually ranges from $25 to $35 per defendant.

Some states will not allow attorneys to represent the parties in small claims courts. But in Georgia, you may choose to have an attorney assist you in Magistrate Court. An attorney is advisable if the opposing party has counsel.

Since the economy has slowed, some clients don’t have money now. So you may want to wait a bit to sue, hoping that the client gets money later (balancing the risk that the client will go out of business). But the time that you have to make your claim is limited. This is based on a legal principle called “the statute of limitations.” Statutes of limitation, in general, are laws that prescribe the time limits during which you can file lawsuits. The deadlines vary with the type of claim and depend on the state where the claim is made. The purpose of them is to reduce the unfairness of defending actions after a substantial period of time has elapsed. They allow people to go on with their lives, regardless of guilt, after a certain amount of time has passed.

In the United States, the statute of limitations to sue for breach of a written contract ranges from 3-15 years. In Georgia, the statute of limitations for a written contract is six years. So whether you file suit now or later, be sure to take steps to protect your business!

For more information, please contact Timothy Buckley III, Esq. at (404) 633-9230.

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