Problems of Interpreting Statutes of Limitations in Cases of Continuing Breach of Contract

Abstract

Most authorities hold that a cause of action for breach of contract crystallizes as soon as the breach has occurred. Logically, for statutes of limitations, the time will start to run from that point. Quite a number of Canadian cases, particularly in Ontario, have taken a very different approach. Where the injured party affirms the contract rather than terminating it for breach, the contract remains in force and it can be said that there is a continuing breach. Several decisions have held that each missed payment or other omission by the party in breach is counted as a new cause of action. As a result, the statute of limitations will never apply to completely bar a claim. However, other cases, particularly at the federal level, have taken the opposite approach, and rejected this idea as inconsistent with the principle of limitations. This was quite forcefully stated by the Supreme Court of Canada in Wewaykum (2002). Recent decisions of the English Court of Appeal and House of Lords have also moved away from the continuing breach principle.

Keywords: statute of limitations, breach of contract, continuing breach