A recent Court of Appeal case, Consulting Concepts International Inc v Consumer Protection Association (Saudi Arabia)  EWCA Civ 1699, has highlighted the importance of understanding when time begins to run for limitation purposes in claims for payment of a debt in respect of the provision of services. The Court ruled that time starts to run from the date the work was done, rather than from the contractually agreed deadline for payment. This means that time may start to run for limitation purposes as soon as the relevant services are provided and not merely when an invoice is issued or payment is due.
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When does the Right to Payment Arise?
This case serves as a reminder for service providers to ensure that their contract terms are clear as to when the right to payment arises and when time begins to run for limitation purposes. It is important for service providers to keep in mind that if there is any doubt as to when they need to bring a claim for payment, they should assume that the clock started as soon as the work was done.
What did the Court of Appeal Decide?
In the case, the claimants (“CCI”) and the defendant (“CPA”) entered into an agreement for CCI to provide services to CPA for asthma research. The agreement provided that all invoices submitted by CCI were to be paid within 90 days by CPA. However, when CCI sought payment for multiple invoices, CPA argued that the claim was time-barred as it was issued more than six years after the work was done. The Court of Appeal agreed with CPA and upheld the order, striking out the claim.
Download the Judgement Here
What should the Service Providers do?
The case provides insight for service providers to understand the limitation period for claims and ensure that their contract terms are clear about when the right to payment arises. It is critical for service providers to review their contracts and ensure they are aware of when the limitation period starts to run, in order to avoid any potential claims being time-barred.
Instructing our Litigation Lawyers
It is best to instruct solicitors in the early stages of a dispute. Liability for costs is always an issue in litigation and based on our extensive litigation experience we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our lawyer’s negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process.
LIMITATION ACT 1980 – WARNING
The Limitation Act 1980 sets out strict statutory deadlines within which you must bring litigation claims. Your legal rights will become irreversibly time-barred if you fail to take legal action (or defend a claim on time). Therefore, you should seek specific legal advice about your legal dispute at the very first opportunity so that you understand the time you have left. Failure to take advice or delay in taking action can be fatal to your prospects of success.
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