A signed agreement is only as valuable as the ability to enforce it. The first question in many contract disputes is not who is right, but whether the claim is still within time. Missing a limitation period can end an otherwise strong claim before the merits are heard.
The basic limitation periods
The Limitation of Actions Act (Cap 22) sets the main periods:
- Simple contract: six years from the date the cause of action accrued (section 4(1)(a)).
- Tort: three years (section 4(2)).
- Libel and slander: twelve months (section 4(2)).
- Recovery of land: twelve years, subject to the specific provisions in section 7.
- Judgments: twelve years, subject to section 4(4).
A contract executed under seal is still a contract for limitation purposes. Cap 22 does not create a general twelve-year period for deeds. The twelve-year periods in the Act deal with specific matters such as judgments, land, mortgage money and trust property, not with ordinary contract claims.
When time starts to run
Time usually runs from the breach, not from the date the contract was signed and not from the date the client first noticed the problem. For an obligation to pay money, that is normally the date payment fell due. For a continuing obligation, each breach may have its own date. For a contract requiring a step by a particular date, the cause of action normally accrues when that date passes without performance.
Demand letters do not automatically restart the clock. An acknowledgment of the debt or a part payment may affect the position, depending on the circumstances and the terms of the acknowledgment. Do not assume that negotiations, a without-prejudice discussion or a promise to pay has preserved the claim. Each of those points should be checked against the Act and the correspondence.
The courts apply limitation strictly. In Gathoni v Kenya Co-operative Creameries Ltd [1982] KECA 10 (KLR), the Court of Appeal explained that the law of limitation is intended to protect defendants against unreasonable delay and expects a claimant to exercise reasonable diligence. Dilatoriness or ignorance does not extend the period which the statute sets.
Claims against public bodies
Claims against government bodies can engage a separate regime. The Public Authorities Limitation Act (Cap 39) applies to certain claims against public authorities, and the Government Proceedings Act (Cap 40) requires notice before proceedings in many cases. The notice period is not the same thing as the limitation period. A claimant should check both, and should not assume that serving a notice automatically preserves a claim that is already out of time.
Contract, tort or both?
The same facts can support a contract claim and a tort claim, but the periods differ. A professional negligence claim, a misrepresentation claim and a claim for breach of a contractual duty may each have a different limitation analysis. The pleaded cause of action matters. A claim should not be framed as contract merely because that produces a longer period if the facts do not support it.
Which forum hears the dispute?
The contract may determine the forum. A valid arbitration clause can require the parties to arbitrate rather than litigate. The clause should be checked for the seat, the rules, the number and method of appointing arbitrators, the language, the governing law and the scope of disputes.
If the contract contains an arbitration clause, the clause selects the forum. It may choose the Nairobi Centre for International Arbitration (NCIA), the Kigali International Arbitration Centre (KIAC), another institution, an ad hoc arbitration, a foreign seat, or no institution at all. NCIA and KIAC are not default forums. A clause that names neither, or that is internally inconsistent, may be unworkable and may require a court application or a fresh agreement on the forum.
Without a valid arbitration clause, a commercial contract claim is normally brought in the High Court or the appropriate subordinate court, depending on the amount and the subject matter. Limitation is only one of the early checks; jurisdiction, the correct parties, the available remedy and the prospects of enforcement also matter.
Practical steps before the clock runs out
- Fix the date of breach and calculate the limitation date from that date, not from the date of the demand.
- Preserve the contract, variations, invoices, delivery notes, correspondence and evidence of part payment or acknowledgment.
- Check whether the contract has an arbitration, mediation or expert-determination clause before filing in court.
- Identify whether a public body is involved and whether a statutory notice is required.
- Consider whether urgent relief is needed to preserve assets or prevent dissipation.
- Do not wait for negotiations to conclude if the limitation date is close.
Limitation is not the only early check. Jurisdiction, the correct parties and the remedy sought can each end a claim regardless of time. Where the contract has a dispute resolution clause, the limitation analysis should be done alongside the forum analysis, because a claim that is within time may still be brought in the wrong place. A claimant should also consider whether an extension, a standstill or a fresh acknowledgment is available on the facts, and take advice before assuming that correspondence has preserved the claim.
Our contract dispute lawyers in Nairobi advise on limitation, forum and the evidence needed to preserve a claim. Contact the firm for a confidential first assessment.
Primary sources: Limitation of Actions Act (Cap 22); Public Authorities Limitation Act (Cap 39); Government Proceedings Act (Cap 40); Arbitration Act 1995; Nairobi Centre for International Arbitration Act 2013; Gathoni v Kenya Co-operative Creameries Ltd [1982] KECA 10 (KLR).
Related guidance
contract lawyers in Nairobi. Related reading: remedies for breach of contract in Kenya · demand letters in Kenya · filing a commercial suit at Milimani.
This article is general information, not legal advice.