March 15, 2012
By Bob Incollingo
After four lean years of slow pay and no pay jobs, you’ve probably weathered the Great Recession with a drawer full of past due receivables. No point in pressing your debtors when you know they can’t pay, but what about now that they can?
You need to understand that your claim for collection of a bad debt doesn’t last forever. For most New Jersey claims to collect money due on construction contracts, a six year statute of limitations applies; that is, count from the day the money was due to be paid to you – that’s usually the date of breach – and add six years to find your drop-dead date to file a lawsuit to collect. On some collection claims, the shorter four-year statute of the Uniform Commercial Code applies. Where lien and bond claims are involved, the statutes of limitation are shorter still. When the time is up, the debt and the money are gone for good.
Browse the Deadlines section of this website. You’ll see that you need to sue for breach of construction contract, including claims that relate to labor and services, within 6 years after the date of accrual of the cause of action (usually the date of breach), unless your contract states a shorter period. To sue for breach of contract for sale of materials, or for breach of a U.C.C. warranty, you need to sue within 4 years after the breach occurs, regardless of lack of knowledge of the breach, while the original agreement may reduce the period of limitation further still. If your construction claim involves personal injury, you need to sue within 2 years after the cause of action accrued.
Give or take a month or two for your personal situation, the local construction business took a sharp downturn in October 2008. If somebody owes you money, do the math. Is it time you took action?
Robert J. Incollingo is a South Jersey construction, business and real estate litigation attorney.