Taylor Vinters - Solicitors

The Government is planning an overhaul of the time allowed for clients to sue contractors, potentially leaving companies faced with unlimited liability periods.

The move has sparked concerns about the effect on insurance and legal costs. The plan would affect all contractual claims, including those against consultants by their clients.

While the reforms would see liability periods cut to three years, the Government also plans to allow for a negotiated time limit for construction work claims.

Planned changes to the Limitation Act would see liability periods cut from six years for a simple contract and 12 years for a deed, to a three-year limitation period for all contracts to run from the claimant’s “date of knowledge”. In addition, there would be a longstop period of 10 years to run from the date the cause of action arose. However, the legislation would also allow both periods to be modified under the agreement of the parties.

The plans have prompted fears that limitation periods would be based on companies’ respective bargaining positions and that clients could play companies off against each other. The main concern is that those higher up the contractual food chain would impose long limitation periods on those in an inferior bargaining position.

The responses to the pre-consultation are due later this month, so there is still some way for this one to run.