15 Jul 2022 Limitation period during warranty period
Both when reporting defects and when starting a procedure afterwards, you should make sure that you do not sit still for too long in order to prevent your claim from being lost. The Arbitration Board for the Building Industry recently issued a ruling in a case that raised the question of whether a defect covered by a guarantee was time-barred.
In this case, a main contractor claimed damages from a subcontractor for work that had not been carried out properly. This subcontractor had issued a guarantee for the work, stating that the subcontractor would repair all defects at its own expense for a period of 10 years. The main contractor had complained about the defect within this period.
In the ensuing proceedings, the subcontractor took the position that the main contractor's claim should be declared inadmissible because the claim was time-barred.
On the basis of the provisions of Section 7:761 (1) of the Dutch Civil Code, the Arbitration Board considered the following. Article 7:761 (1) of the DCC stipulates that any legal claim on account of a defect in the delivered work lapses two years after it has been protested against.
According to the Arbitration Board, this limitation period also applies to a timely appeal to a warranty claim.
The main contractor had reported the defect on 12 November 2015. With the notification on 12 November 2015, the two-year limitation period started. Contrary to the main contractor's assertion, the limitation period does not start to run only after the subcontractor has rejected the repair requested by the main contractor. This only applies if the notice of complaint contains a period for repair, which was not the case here.
The limitation period therefore expired on 12 November 2017. The limitation period could have been interrupted by means of an interruption letter in which the right to performance was unambiguously reserved. However, this was not done. Nor had there been any remedial work or attempts at repair by the subcontractor on the basis of which a new limitation period would have begun to run.
The main contractor was also not followed in its view that a legal claim cannot be time-barred before the cause of defect in a work has actually been established. The proceedings were instituted by the general contractor on 17 December 2020. This was too late because according to the Arbitration Board, the main contractor's legal claim was already time-barred as of 12 November 2017.
The main contractor missed the boat here because the proceedings were started too late, even though the complaint was reported soon after its discovery and within the guarantee period. Even though it may take some time to find out the exact cause of the defect, stay alert and keep an eye on the two-year term that starts to run from the notification. The deadline is strictly enforced. Too late is really too late.
If you have any questions about reporting a defect, the statute of limitations and interruption, or if you would like advice, please do not hesitate to contact us. Please contact one of our lawyers without obligation. We will be happy to assist you.