How long does a party have to sue on this contract in Illinois, and can the contract shorten it?
Ten years on a written contract: actions on bonds, promissory notes, bills of exchange, written leases, written contracts or other evidences of indebtedness in writing (and Wage Payment and Collection Act actions) must be commenced within 10 years after the cause of action accrued, except as provided in UCC § 2-725 (735 ILCS 5/13-206). Five years on an unwritten contract and on 'all civil actions not otherwise provided for', and that section opens with its own exceptions too, for UCC § 2-725 and for § 11-13 of the Public Aid Code (735 ILCS 5/13-205). Four years for breach of a contract for sale of goods, which by the original agreement the parties may reduce to not less than one year but may not extend (810 ILCS 5/2-725). Parties to a contract may otherwise agree to a shortened contractual limitation period to replace a statute of limitations, so long as it is reasonable (Country Preferred Insurance Co. v. Whitehead). For goods the clock is fixed by § 2-725 itself: accrual on breach "regardless of the aggrieved party's lack of knowledge", warranty breach on tender of delivery unless the warranty explicitly extends to future performance, and a six-month window to refile an action terminated so as to leave another available (810 ILCS 5/2-725(2)-(3)). A time-barred set-off or counterclaim may still be pleaded against a claim the plaintiff owned before the set-off became barred, though that section "shall not affect the right of a bona fide assignee of a negotiable instrument assigned before due" (735 ILCS 5/13-207). And Country Preferred states the default the shortening displaces: absent "specific and clear provisions limiting the period within which suits must be filed", the ten-year written-contract statute applies. It then enforced the shortening on its facts: "We agree with those appellate panels that have found this two-year contractual limitation does not violate Illinois public policy when applied to a legally competent plaintiff": reversed the appellate court, affirmed the circuit court and remanded on the remaining counts. Two more things the limitation sections do themselves: § 13-206 fixes accrual on a promissory note dated on or after the 1997 amendment (on the due date or the date of acceleration; ten years after a demand on a demand note; and barred outright where neither principal nor interest has been paid for ten continuous years with no demand), and § 2-725(4) leaves the law on tolling untouched and does not reach causes of action that accrued before the UCC took effect.
The trap
Two Illinois-specific effects. First, an Illinois forum applies Illinois limitation law even under a foreign choice-of-law clause, because Illinois treats limitations as procedural (Belleville Toyota), but that does not guarantee ten years: 13-206 itself excepts UCC 2-725 sales of goods, and under the borrowing rule of 735 ILCS 5/13-210 a cause of action that arose outside Illinois and cannot be maintained where it arose by reason of the lapse of time cannot be maintained in Illinois either. Second, shortening works only if reasonable, and in employment it now fails by statute: as amended by P.A. 104-320 the Workplace Transparency Act voids a unilateral condition of employment that purports to shorten the applicable statute of limitation for an unlawful-employment-practice claim (820 ILCS 96/1-25(b)). Note also that a written payment or new written promise to pay restarts the ten years under § 13-206. One thing about the Workplace Transparency Act is missing from every rule that cites it, and it is the drafting answer rather than a footnote: § 1-25 voids the clause as a UNILATERAL condition of employment, not outright. § 1-25(c) provides that “Any agreement, clause, covenant, or waiver that is a mutual condition of employment or continued employment may include provisions that would otherwise be against public policy as a unilateral condition of employment or continued employment, but only if the agreement, clause, covenant, or waiver is in writing, demonstrates actual, knowing, and bargained-for consideration from both parties, and acknowledges the right of the employee or prospective employee to:” and then lists six rights the writing must acknowledge, reporting a good-faith allegation of unlawful employment practices to a government agency, reporting criminal conduct, participating in a proceeding about unlawful employment practices, making truthful statements or disclosures required by law, requesting or receiving confidential legal advice, and engaging in concerted activity about work-related issues. § 1-25(d) then supplies the sanction: “Failure to comply with the provisions of subsection (c) shall establish a rebuttable presumption that the agreement, clause, covenant, or waiver is a unilateral condition of employment or continued employment that is governed by subsection (a) or (b).” And § 1-25(e) adds that nothing in the section prevents an employee or prospective employee and an employer from negotiating and bargaining over the terms, privileges and conditions of employment. So in Illinois the move is not to delete the clause but to make it mutual, written, supported by actual bargained-for consideration on both sides and carrying the six acknowledgments; miss any of that and subsection (d) puts it back under (a) or (b).
18 authorities
- statute735 ILCS 5/13-206enactment date not established
The words that state the rule
Except as provided in Section 2-725 of the "Uniform Commercial Code", actions on bonds, promissory notes, bills of exchange, written leases, written contracts, or other evidences of indebtedness in writing and actions brought under the Illinois Wage Payment and Collection Act shall be commenced within 10 years next after the cause of action accrued
- statute735 ILCS 5/13-205enactment date not established
The words that state the rule
Except as provided in Section 2-725 of the "Uniform Commercial Code", approved July 31, 1961, as amended, and Section 11-13 of "The Illinois Public Aid Code", approved April 11, 1967, as amended, actions on unwritten contracts, expressed or implied, or on awards of arbitration, or to recover damages for an injury done to property, real or personal, or to recover the possession of personal property or damages for the detention or conversion thereof, and all civil actions not otherwise provided for, shall be commenced within 5 years next after the cause of action accrued.
- statute810 ILCS 5/2-725enactment date not established
The words that state the rule
An action for breach of any contract for sale must be commenced within 4 years after the cause of action has accrued. By the original agreement the parties may reduce the period of limitation to not less than one year but may not extend it.
- case2012 IL 113365Country Preferred Insurance Co. v. WhiteheadIll.decided 2012
The words that state the rule
The parties to a contract may agree to a shortened contractual limitation period to replace a statute of limitations, so long as it is reasonable.
- case770 N.E.2d 177Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc.Ill.decided 2002read it at the source ↗
The words that state the rule
Statutes of limitations are procedural, merely fixing the time in which the remedy for a wrong may be sought, and do not alter substantive rights. Fredman Brothers 109 Ill.2d at 209 , 93 Ill.Dec. 360 , 486 N.E.2d 893 ; see also Cox, 212 Ill.App.3d at 1062 , 156 Ill.Dec. 1031 , 571 N.E.2d 1011 . Accordingly, Illinois law governs the timeliness of plaintiff's claim under the 1980 dealer agreement.
- statute820 ILCS 96/1-25enactment date not established
The words that state the rule
Any agreement, clause, covenant, or waiver that is a unilateral condition of employment or continued employment and requires the employee or prospective employee to waive, arbitrate, or otherwise diminish any existing or future claim, right, or benefit related to an unlawful employment practice to which the employee or prospective employee would otherwise be entitled under any provision of State or federal law, including that which purports to shorten the applicable statute of limitation, apply non-Illinois law to an Illinois employee's claim, or require a venue outside of Illinois to adjudicate an Illinois employee's claim, is against public policy, void to the extent it denies an employee or prospective employee a substantive or procedural right or remedy related to alleged unlawful employment practices
- statute735 ILCS 5/13-210enactment date not established
The words that state the rule
When a cause of action has arisen in a state or territory out of this State, or in a foreign country, and, by the laws thereof, an action thereon cannot be maintained by reason of the lapse of time, an action thereon shall not be maintained in this State.
- statute820 ILCS 96/1-25enactment date not established
The words that state the rule
Any agreement, clause, covenant, or waiver that is a mutual condition of employment or continued employment may include provisions that would otherwise be against public policy as a unilateral condition of employment or continued employment, but only if the agreement, clause, covenant, or waiver is in writing, demonstrates actual, knowing, and bargained-for consideration from both parties, and acknowledges the right of the employee or prospective employee to:
- statute820 ILCS 96/1-25enactment date not established
The words that state the rule
Failure to comply with the provisions of subsection (c) shall establish a rebuttable presumption that the agreement, clause, covenant, or waiver is a unilateral condition of employment or continued employment that is governed by subsection (a) or (b).
- statute735 ILCS 5/13-206enactment date not established
The words that state the rule
but if any payment or new promise to pay has been made, in writing, on any bond, note, bill, lease, contract, or other written evidence of indebtedness, within or after the period of 10 years, then an action may be commenced thereon at any time within 10 years after the time of such payment or promise to pay.
- statute810 ILCS 5/2-725enactment date not established
The words that state the rule
(2) A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered. (3) Where an action commenced within the time limited by subsection (1) is so terminated as to leave available a remedy by another action for the same breach such other action may be commenced after the expiration of the time limited and within 6 months after the termination of the first action unless the termination resulted from voluntary discontinuance or from dismissal for failure or neglect to prosecute.
- statute735 ILCS 5/13-207enactment date not established
The words that state the rule
A defendant may plead a set-off or counterclaim barred by the statute of limitation or the statute of repose, while held and owned by him or her, to any action, the cause of which was owned by the plaintiff or person under whom he or she claims, before such set-off or counterclaim was so barred, and not otherwise. This section shall not affect the right of a bona fide assignee of a negotiable instrument assigned before due.
- case2012 IL 113365Country Preferred Insurance Co. v. Whiteheaddecided 2012
The words that state the rule
In the absence of specific and clear provisions limiting the period within which suits must be filed, the 10-year statute of limitations for actions on written contracts is applicable to actions
- statute820 ILCS 96/1-25enactment date not established
The words that state the rule
(1) report any good faith allegation of unlawful employment practices to any appropriate federal, State, or local government agency enforcing discrimination laws; (2) report any good faith allegation of criminal conduct to any appropriate federal, State, or local official; (3) participate in a proceeding related to unlawful employment practices, including any litigation brought by any federal, State, or local government agency or any other person who alleges that the employer has violated any State, federal, or local law, regulation, or rule; (4) make any truthful statements or disclosures required by law, regulation, or legal process; (5) request or receive confidential legal advice; and (6) engage in concerted activity to address work-related issues.
- statute735 ILCS 5/13-206enactment date not established
The words that state the rule
For purposes of this Section, with regard to promissory notes dated on or after the effective date of this amendatory Act of 1997, a cause of action on a promissory note payable at a definite date accrues on the due date or date stated in the promissory note or the date upon which the promissory note is accelerated. With respect to a demand promissory note dated on or after the effective date of this amendatory Act of 1997, if a demand for payment is made to the maker of the demand promissory note, an action to enforce the obligation of a party to pay the demand promissory note must be commenced within 10 years after the demand. An action to enforce a demand promissory note is barred if neither principal nor interest on the demand promissory note has been paid for a continuous period of 10 years and no demand for payment has been made to the maker during that period.
- statute810 ILCS 5/2-725enactment date not established
The words that state the rule
(4) This Section does not alter the law on tolling of the statute of limitations nor does it apply to causes of action which have accrued before this Act becomes effective.
- case2012 IL 113365Country Preferred Insurance Co. v. WhiteheadIll.decided 2012
The words that state the rule
We agree with those appellate panels that have found this two-year contractual limitation does not violate Illinois public policy when applied to a legally competent plaintiff.
- case2012 IL 113365Country Preferred Insurance Co. v. WhiteheadIll.decided 2012
The words that state the rule
For the reasons stated, we reverse the judgment of the appellate court and affirm the judgment of the circuit court. We remand this matter to the circuit court for any further action, consistent with this opinion, on the remaining counts of Whitehead’s counterclaim. ¶ 42 Appellate court judgment reversed. ¶ 43 Circuit court judgment affirmed. ¶ 44 Cause remanded.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.