Can the contract shorten, or lengthen: the time the other side has to sue us?
Shortening, yes; lengthening in advance, no. CPLR 201 requires an action to be commenced within the time specified in article 2 unless a different time is prescribed by law or A SHORTER TIME IS PRESCRIBED BY WRITTEN AGREEMENT, and no court may extend the statutory time. So an agreement specifying a shorter but reasonable period within which to commence an action is enforceable 'provided it is in writing (CPLR 201)', and a contractual period that expires before suit can be brought, because the contract imposes a condition precedent to suit that cannot be met within it, is not reasonable (Executive Plaza, answering a certified question from the Second Circuit). Duration is not the test: the Court of Appeals has enforced one-year and six-month limits and said there is nothing inherently unreasonable about a two-year period, so what defeated the clause in Executive Plaza was its accrual date, not its length. The default for contract claims is six years: CPLR 213(2) covers an action upon a contractual obligation or liability, express or implied, subject to the exceptions it lists. Going the other way, GOL § 17-103 (set out here only as the Court of Appeals quotes it in Kassner, not from the section's own published text) is 'applicable only to actions arising out of a contract' and requires a promise 'to waive, to extend, or not to plead the statute of limitation' to be in writing and signed by the promisor 'after the accrual of the cause of action'; if those requirements are met the promise renews the limitations period for the applicable period unless a shorter one is specified, the section is exclusive, and 'extension agreements made prior to the accrual of the cause of action continue to have "no effect"'. Two more CPLR sections bear on the clock. Where no limitation is specifically prescribed the period is six years (CPLR 213(1)). And CPLR 202 is New York's borrowing statute: an action on a cause of action accruing outside the state cannot be commenced after the expiration of the time limited by the laws of either New York or the place where it accrued, except that a cause of action accruing in favour of a New York resident takes New York's time only.
The trap
The trap is that the same clause can be valid or void depending on direction and timing. A suit-limitation clause shortening the six-year period is enforceable if reasonable; an extension agreement made at the start of the relationship has no effect, because a party cannot, in Kassner's words, 'in advance, make a valid promise that a statute founded in public policy shall be inoperative', and because, as Kassner reads § 17-103, the promise must post-date accrual. Kassner applied this to a City of New York contract with an engineering firm to arrange the relocation of utility facilities, whose clause said that 'No action shall be * * * maintained against the City upon any claim based upon this contract ... unless such action shall be commenced within six (6) months after the date of filing in the office of the Comptroller of the City of the certificate for the final payment hereunder': the claim had accrued when the comptroller's audit was completed and payment refused, and the clause, adopted at the inception of the contract, could not extend the statutory period. The plaintiff had won on that clause below; the Court of Appeals reversed the Appellate Division, denied the plaintiff's motion to dismiss the limitations defence, granted the city summary judgment and answered the certified question in the negative. Reasonableness is a real limit on the shortening side: Executive Plaza held a two-year suit limit running from a fire loss unreasonable and unenforceable where the policy made replacement a condition of recovering replacement cost and the property could not reasonably be replaced within two years: an answer to a certified question from the Second Circuit, given on the assumption that question required, and resting on a rule the Court took from Judge Crane's dissent in Continental Leather, no case of its own having squarely so held.
17 authorities
- statuteN.Y. CVP Law § 201enactment date not established
The words that state the rule
An action, including one brought in the name or for the benefit of the state, must be commenced within the time specified in this article unless a different time is prescribed by law or a shorter time is prescribed by written agreement. No court shall extend the time limited by law for the commencement of an action.
- statuteN.Y. CVP Law § 213enactment date not established
The words that state the rule
2. an action upon a contractual obligation or liability, express or implied, except as provided in section two hundred thirteen-a or two hundred fourteen-i of this article or article 2 of the uniform commercial code or article 36-B of the general business law;
The words that state the rule
The parties may cut back on the Statute of Limita *551 tions by agreeing that any suit must be commenced within a shorter period than is prescribed by law. Such an agreement does not conflict with public policy but, in fact, "more effectively secures the end sought to be attained by the statute of limitations” (Ripley v Aetna Ins. Co., 30 NY 136, 163 ). Thus an agreement which modifies the Statute of Limitations by specifying a shorter, but reasonable, period within which to commence an action is enforceable (Sapinkopf v Cunard S.S. Co., 254 NY 111 ) provided it is in writing (CPLR 201).
The words that state the rule
The validity of this type of agreement depends initially on the time at which it was made. If the agreement to "waive” or extend the Statute of Limitations is made at the inception of liability it is unenforceable because a party cannot "in advance, make a valid promise that a statute founded in public policy shall be inoperative” (Shapley v Abbott, 42 NY 443, 452 ; Croker v Ireland, 235 App Div 760 ; Pine v Okoniewski, 256 App Div 519 ; cf. Wood Co. v Horgan, . 291 NY 422, 426 ; see, also, Simpson, Contracts, § 41, pp 128-129). Of course at that stage there is a greater likelihood that a "waiver” or extension of the defense, as part of the initial contract or obligation, was the result of ignorance, improvidence, an unequal bargaining position or was simply unintended. But if the agreement is made after the cause of action has accrued the Legislature has provided that it may be enforceable under certain circumstances.
The words that state the rule
The statute, it should be noted, is exclusive (see General Obligations Law, § 17-103, *552 subd 3). Thus extension agreements made prior to the accrual of the cause of action continue to have "no effect” (General Obligations Law, § 17-103, subd 3).
- case22 N.Y.3d 511Executive Plaza, LLC v. Peerless Insurance Co.N.Y.decided 2014read it at the source ↗
The words that state the rule
We conclude that the contractual period at issue here—two years from the date of “direct physical loss or damage” (i.e., from the date of the fire)—is not reasonable if, as the Second Circuit’s question requires us to assume, the property cannot reasonably be replaced within two years. It is true, as the District Court pointed out, that there is nothing inherently unreasonable about a two-year period of limitation. In fact, we have enforced contractual limitation periods of one year (Blitman Constr. Corp. v Insurance Co. of N. Am., 66 NY2d 820 [1985]; Sapinkopf v Cunard S.S. Co., Ltd., 254 NY 111, 114 [1930]) and six months (Continental Leather Co. v Liverpool, Brazil & Riv. Plate Steam Nav. Co., 259 NY 621 [1932]; Aron & Co. v Panama R.R. Co., 255 NY 513, 519 [1931]; see also John J. Kassner, 46 NY2d at 552 ). The problem with the limitation period in this case is not its duration, but its accrual date. It is neither fair nor reasonable to require a suit within two years from the date of the loss, while imposing a condition precedent to the suit—in this case, completion of replacement of the property—that cannot be met within that two-year period. A “limitation period” that expires before suit can be brought is not really a limitation period at all, but simply a nullification of the claim.
- case22 N.Y.3d 511Executive Plaza, LLC v. Peerless Insurance Co.N.Y.decided 2014read it at the source ↗
The words that state the rule
We have found no case in which we have squarely held that an otherwise reasonable limitation period may be rendered unreasonable by an inappropriate accrual date. We think, however, that the law was correctly stated in Judge Crane’s dissenting opinion in Continental Leather Co.: “[T]he period of time within which an action must be brought . . . should be fair and reasonable, in view of the circumstances of each particular case. . . . The circumstances, not the time, must be the determining factor” ( 259 NY at 622-623 ).
- case22 N.Y.3d 511Executive Plaza, LLC v. Peerless Insurance Co.N.Y.decided 2014read it at the source ↗
The words that state the rule
Answering a question from the United States Court of Appeals for the Second Circuit, we hold that such a contractual limitation period, applied to a case in which the property cannot reasonably be replaced in two years, is unreasonable and unenforceable.
- case22 N.Y.3d 511Executive Plaza, LLC v. Peerless Insurance Co.N.Y.decided 2014read it at the source ↗
The words that state the rule
Accordingly, the question certified should be answered in the affirmative. Chief Judge Lippman and Judges Graffeo, Read, Pigott, Rivera and Abdus-Salaam concur. Following certification of a question by the United States Court of Appeals for the Second Circuit and acceptance of the question by this Court pursuant to section 500.27 of this Court’s Rules of Practice, and after hearing argument by counsel for the parties and consideration of the briefs and the record submitted, certified question answered in the affirmative.
- statuteN.Y. CVP Law § 202enactment date not established
The words that state the rule
An action based upon a cause of action accruing without the state cannot be commenced after the expiration of the time limited by the laws of either the state or the place without the state where the cause of action accrued, except that where the cause of action accrued in favor of a resident of the state the time limited by the laws of the state shall apply.
- statuteN.Y. CVP Law § 213enactment date not established
The words that state the rule
The following actions must be commenced within six years: 1. an action for which no limitation is specifically prescribed by law;
The words that state the rule
Upon audit, however, the comptroller disallowed $38,423.69 claimed for "technical services” and only authorized a final payment of $1,100. The record does not indicate the date the plaintiff was informed of the comptroller’s decision. It is evident though that the plaintiff was aware of the results of the audit by July 1, 1968 when it sent a letter of protest demanding payment of the full amount.
The words that state the rule
The controlling statute (General Obligations Law, § 17-103, subd 1) is applicable only to actions arising out of a contract and requires that the agreement or promise "to waive, to extend, or not to plead the statute of limitation” be in writing and signed by the promisor "after the accrual of the cause of action”. If these requirements are met the agreement or promise has the effect of renewing the Statute of Limitations for the applicable period, unless a shorter period is specified.
The words that state the rule
The agreement also provides that "No action shall be * * * maintained against the City upon any claim based upon this contract or arising out of this contract * * * unless such action shall be commenced within six (6) months after the date of filing in the office of the Comptroller of the City of the certificate for the final payment hereunder * * * None of the provisions of Article 2 of the Civil Practice Laws and Rules shall apply to any action against the City arising out of this contract.”
The words that state the rule
The breach, if any, occurred at this point because the comptroller — the only official responsible and specifically designated in the contract to authorize payment on behalf of the city — unequivocally refused to pay the full amount demanded and allegedly due on the contract. Therefore the cause of action for breach of contract accrued, within the meaning of the Statute of Limitations, no later than July 1, 1968.
The words that state the rule
In any event, since it was adopted at the inception of the contract and not after the cause of action had accrued, it may not serve to extend the Statute of Limitations (General Obligations Law, § 17-103, subds 1, 3).
The words that state the rule
Accordingly, the order of the Appellate Division should be reversed, with costs, the plaintiff’s motion to dismiss the second affirmative defense should be denied, and the defendant’s cross motion for summary judgment should be granted. The certified question should be answered in the negative.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.