How long do we have to sue on a Washington contract, and can the contract shorten it?
An action upon a contract in writing, or liability express or implied arising out of a written agreement, must be commenced within six years (RCW 4.16.040(1)); an action upon a contract or liability, express or implied, which is not in writing and does not arise out of any written instrument, within three years (RCW 4.16.080(3)), except that an action "upon an account receivable", meaning "any obligation for payment incurred in the ordinary course of the claimant's business or profession, whether arising from one or more transactions and whether or not earned by performance", gets SIX years whether written or not (RCW 4.16.040(2)), and 4.16.080(3) says so in its own opening words. The six-year written rule also yields to RCW 64.04.007(2): a lender that releases its deed of trust or mortgage on owner-occupied real property for less than full payment must sue for the balance within three years of the release or forfeit it, for consumer debts only. A contractual provision shortening the period is subject to unconscionability review measured against the statutory period it displaces: in Tadych the Supreme Court held void a one-year limitation in a custom-home construction contract that deprived the owners of the six-year period under chapter 4.16 RCW, holding that a provision becomes substantively unconscionable when it eliminates otherwise established statutory rights, is one-sided in favour of the drafter, is not prominently set out, is not negotiated or bargained for, and provides no benefit to the affected party. In Adler a 180-day limitations provision in an employment arbitration agreement unreasonably favoured the employer and was substantively unconscionable, and note what the court then did with it: Adler SEVERED the attorney-fee and limitations provisions "from the agreement thus preserving the parties' intent to arbitrate their disputes", and remanded on procedural unconscionability, rather than voiding the agreement. Gandee supplies the arithmetic those comparisons run on: a clause cutting the Consumer Protection Act's four years to 30 days was substantively unconscionable "[c]onsistent with Adler's holding", which Gandee describes as "a shortening of the statute of limitations from three years to 180 days". Severance is not automatic, though: in Gandee the clause was one of three bad terms and the court held "[t]he arbitration clause itself is so permeated with unconscionable provisions as to make severance impossible", affirmed the refusal to compel arbitration, and remanded.
The trap
The comparison is to the statutory period at issue, not to other clauses courts have upheld. The Court of Appeals in Tadych had reasoned that Adler and Gandee did not help the owners because the one-year provision was "twelve times longer" than the one in Gandee and "at least twice as long as that in Adler"; the Supreme Court answered that "[t]his is an erroneous application of this analysis" and that "[t]he proper assessment requires a comparison of the contractual period with the statutorily established period at issue in the particular case". Gandee's clause cut four years to 30 days and Adler's cut three years to 180 days, so a clause longer than either is not thereby safe. A short period buried in a 'warranty' paragraph of a boilerplate contract drafted by the stronger party is the fact pattern that failed, and the remedy was not severance but voidness: Tadych held the provision "void and unenforceable", found the owners' suit timely under chapter 4.16 RCW, and reversed and remanded for trial without reaching procedural unconscionability or equitable estoppel. Two more edges. An unwritten trade account is not on the three-year track: the accounts-receivable limb of RCW 4.16.040 reaches it, so 'oral means three years' is wrong for the commonest unwritten commercial claim. And a sale of goods is governed by the UCC's own limitation section, RCW 62A.2-725, which is not among the authorities reviewed here (no Washington UCC text was reviewed at all), so this rule states the general periods and not the one that applies to a supply contract.
14 authorities
- statuteRCW 4.16.040enactment date not established
The words that state the rule
The following actions shall be commenced within six years: (1) An action upon a contract in writing, or liability express or implied arising out of a written agreement, except as provided for in RCW 64.04.007(2). (2) An action upon an account receivable. For purposes of this section, an account receivable is any obligation for payment incurred in the ordinary course of the claimant's business or profession, whether arising from one or more transactions and whether or not earned by performance. (3) An action for the rents and profits or for the use and occupation of real estate. [ 2012 c 185 s 3; 2007 c 124 s 1; 1989 c 38 s 1; 1980 c 105 s 2; 1927 c 137 s 1; Code 1881 s 27; 1854 p 363 s 3; RRS s 157.] Notes: Application—2007 c 124: "This act applies to all causes of action on accounts receivable, whether commenced before or after July 22, 2007." [ 2007 c 124 s 2.]
- statuteRCW 4.16.080enactment date not established
The words that state the rule
The following actions shall be commenced within three years: (1) An action for waste or trespass upon real property; (2) An action for taking, detaining, or injuring personal property, including an action for the specific recovery thereof, or for any other injury to the person or rights of another not hereinafter enumerated; (3) Except as provided in RCW 4.16.040(2), an action upon a contract or liability, express or implied, which is not in writing, and does not arise out of any written instrument; (4) An action for relief upon the ground of fraud, the cause of action in such case not to be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud; (5) An action against a sheriff, coroner, or constable upon a liability incurred by the doing of an act in his or her official capacity and by virtue of his or her office, or by the omission of an official duty, including the nonpayment of money collected upon an execution; but this subsection shall not apply to action for an escape; (6) An action against an officer charged with misappropriation or a failure to properly account for public funds intrusted to his or her custody; an action upon a statute for penalty or forfeiture, where an action is given to the party aggrieved, or to such party and the state, except when the statute imposing it prescribed a different limitation: PROVIDED, HOWEVER, The cause of action for such misappropriation, penalty, or forfeiture, whether for acts heretofore or hereafter done, and regardless of lapse of time or existing statutes of limitations, or the bar thereof, even though complete, shall not be deemed to accrue or to have accrued until discovery by the aggrieved party of the act or acts from which such liability has arisen or shall arise, and such liability, whether for acts heretofore or hereafter done, and regardless of lapse of time or existing statute of limitation, or the bar thereof, even though complete, shall exist and be enforceable for three years after discovery by aggrieved party of the act or acts from which such liability has arisen or shall arise. [ 2011 c 336 s 83; 1989 c 38 s 2; 1937 c 127 s 1; 1923 c 28 s 1; Code 1881 s 28; 1869 p 8 s 28; 1854 p 363 s 4; RRS s 159.]
- case200 Wash. 2d 635Tadych v. Noble Ridge Construction, Inc.Wash.decided 2022read it at the source ↗
The words that state the rule
A contract provision becomes substantively unconscionable when it eliminates otherwise established statutory rights and is one sided, benefiting the contract drafter, is also not prominently set out in the contract, is not negotiated or bargained for, and provides no benefit to the affected party. Based on this, we hold here that this limitation provision is void and unenforceable. We further hold that under chapter 4.16 RCW, the Tadychs’ suit is timely. We reverse the Court of Appeals and remand for trial.8 8 Based on this holding, we do not address the additional issues of procedural unconscionability and equitable estoppel.
- case200 Wash. 2d 635Tadych v. Noble Ridge Construction, Inc.Wash.decided 2022read it at the source ↗
The words that state the rule
In rejecting the Tadychs’ substantive unconscionability claim, the Court of Appeals reasoned that Adler and Gandee do not support the Tadychs’ position because the one-year provision at issue here is “twelve times longer” than the limitation provision at issue in Gandee and “at least twice as long as that in Adler.” Tadych, No. 81948-8-I, slip op. at 15. This is an erroneous application of this analysis. The proper assessment requires a comparison of the contractual period with the statutorily established period at issue in the particular case.
The words that state the rule
Therefore, we hold that the 180-day limitations provision in the agreement unreasonably favors Fred Lind Manor and thus is substantively unconscionable.
The words that state the rule
We reject Adler’s claims that the WLAD entitles him to a judicial forum, that Fred Lind Manor has waived its right to arbitrate this dispute, and/or that Fred Lind Manor should be equitably estopped from asserting arbitration. However, we conclude that the attorney fees and limitations provisions of the arbitration agreement are substantively unconscionable but sever these provisions from the agreement thus preserving the parties’ intent to arbitrate their disputes. We remand to the trial court for determination, consistent with this opinion, of Adler’s claims of procedural unconscionability, including whether Adler implicitly waived his right to a jury trial and the substantive conscionability of the fee-splitting provision.
The words that state the rule
Generally, a private statute of limitations will control over general statutes of limitation “ ‘ “unless prohibited by statute or public policy, or unless [it is] unreasonable.” ’ ” Adler, 153 Wn.2d at 356 (quoting Resp’ts’ *607 Br. at 43 (quoting Ashburn v. Safeco Ins. Co. of Am., 42 Wn. App. 692, 696 , 713 P.2d 742 (1986))). Here, the provision shortens the statute of limitations from the four years provided by the CPA to 30 days. In Adler , we held a shortening of the statute of limitations from three years to 180 days to be substantively unconscionable. Adler, 153 Wn.2d at 355-58 . Consistent with Adler’s holding, we find the statute of limitations provision here to be substantively unconscionable.
The words that state the rule
We affirm the trial court’s denial of the motion to compel arbitration. The arbitration clause itself is so permeated with unconscionable provisions as to make severance impossible. Without an enforceable arbitration clause, the plaintiff cannot be compelled to arbitrate. Accordingly, we remand for further proceedings consistent with this opinion.
- statuteRCW 64.04.007enactment date not established
The words that state the rule
(1) If the beneficiary or mortgagee, or its assignees, of debt secured by owner-occupied real property intends to release its deed of trust or mortgage in the real property for less than full payment of the secured debt, it shall provide upon its first written notice to the borrower the following information in substantially the following form: "To: [Name of borrower] DATE: Please take note that [name of beneficiary or mortgagee, or its assignees], in releasing its security interest in this owner-occupied real property, [waives or reserves] the right to collect that amount that constitutes full payment of the secured debt. The amount of debt outstanding as of the date of this letter is $. . . . . .. However, nothing in this letter precludes the borrower from negotiating with the [name of beneficiary or mortgagee, or its assignees] for a full release of this outstanding debt. If [name of beneficiary or mortgagee, or its assignees] does not initiate a court action to collect the outstanding debt within three years on the date which it released its security interest, the right to collect the outstanding debt is forfeited." (2) If the beneficiary or mortgagee, or its assignees, of debt secured by owner-occupied real property intends to pursue collection of the outstanding debt, it must initiate a court action to collect the remaining debt within three years from the date on which it released its deed of trust or mortgage in the owner-occupied real property or else it forfeits any right to collect the remaining debt. (3) This section applies only to debts incurred by individuals primarily for personal, family, or household purposes. This section does not apply to debts for business, commercial, or agricultural purposes. (4) For the purposes of this section, "owner-occupied real property" means real property consisting solely of a single-family residence, a residential condominium unit, or a residential cooperative unit that is the principal residence of the borrower. [ 2012 c 185 s 1.]
- case200 Wash. 2d 635Tadych v. Noble Ridge Construction, Inc.Wash.decided 2022read it at the source ↗
The words that state the rule
Similar to the provision in Adler and Gandee, this limitation provision effectively abolishes a plaintiff’s statutory right under RCW 4.16.310 to bring a claim.
- case200 Wash. 2d 635Tadych v. Noble Ridge Construction, Inc.Wash.decided 2022read it at the source ↗
The words that state the rule
The unconscionability issue in this case centers on one sentence in a “warranty” paragraph on the 10th page of a 14-page boilerplate contract drafted by the respondent-contractor
- case200 Wash. 2d 635Tadych v. Noble Ridge Construction, Inc.Wash.decided 2022read it at the source ↗
The words that state the rule
The Tadychs entered into a written contract with Noble Ridge Construction Inc. to build a custom home.
- statuteRCW 4.16.005enactment date not established
The words that state the rule
Except as otherwise provided in this chapter, and except when in special cases a different limitation is prescribed by a statute not contained in this chapter, actions can only be commenced within the periods provided in this chapter after the cause of action has accrued. [ 1989 c 14 s 1.]
- statuteRCW 4.16.130enactment date not established
The words that state the rule
An action for relief not hereinbefore provided for, shall be commenced within two years after the cause of action shall have accrued. [Code 1881 s 33; 1877 p 9 s 32; 1854 p 364 s 7; RRS s 165.]
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.