Legal Affairs

Limitation of Actions in the German Law

When a claim is said to be barred by limitation (German: “Verjährung”) or when this is successfully pleaded as a defence, it means that the time has run out for legally enforcing what is in fact a valid claim. The claim against the other party still exists. But instead of having to satisfy it, the other side can plead the statute of limitations. Although a claim may be barred by limitation, it may still be used for the purposes of a setoff or to enforce a right of retention provided that the claim was not yet barred by limitation at the time the setoff or the retention of title was initially possible.

Limitation period

The standard limitation period is three years (Section 195 of the [German] Civil Code (BGB)). Unless another date for the beginning of a limitation period is prescribed, the standard limitation period begins to run at the close of the year in which the claim arose and in which the creditor obtained or, in the absence of gross negligence, had to have obtained knowledge of the facts supporting the claim and knowledge of the identity of the debtor.
This limitation period applies to all claims that came into existence after January 1, 2002 unless a special limitation period applies to the claim. Special limitation periods are found in a variety of statutes, for example in the Commercial Code or the [German] Stock Corporation Act, which govern some particular claims.

Special rules

The 30-year limitation period (Section 197, Section 199 (2) BGB), which begins to run at different times:
a) claims for damages based on an intentionally caused fatal injury, personal injury, or injury to someone’s health, violation of liberty, or violation of sexual self-determination:
The limitation period begins to run with the commitment of the act, the breach of the obligation, or any other loss-triggering event.
b) claims for surrender of possession arising from ownership rights and other rights in rem:
The limitation period begins to run with the claim’s inception.
c) claims that have been judicially determined to be final and absolute:
The limitation period begins to run when the decision is no longer appealable.
d) claims based on enforceable judicial settlements or enforceable deeds:
The limitation period begins to run when the instrument becomes judicially enforceable.
e) claims that have become enforceable on the basis of rulings made in insolvency proceedings:
The limitation period begins to run when the ruling is made.
f) claims for reimbursement of the costs of compulsory execution (German: “Zwangsvollstreckung”):
The limitation period begins to run when the decision to be enforced is no longer appealable.
Sale contracts
Special limitation periods apply to purchased goods that are defective (Section 438 BGB):
a) The basic rule is two years. The limitation period begins to run when risk passes (which is usually with the delivery of the goods).
b) The standard limitation period of three years applies in the case of fraudulently concealed defects. The limitation period begins to run at the close of the year in which knowledge of the claim and the identity of the debtor is obtained.
c) Five years in the case of a building structure and in the case of goods (building materials) that have produced the defectiveness of a building structure.
d) 30 years in the case of purchased goods that can be reclaimed on the basis of a right in rem (e.g. ownership) of a third party.
Works contracts
Special limitation periods apply to defective works produced under a works contract (Section 634 a BGB):
a) The basic rule is two years beginning with the time the work is formally accepted as contractually conform.
b) The limitation period of three years applies in the case of fraudulently concealed defects. The limitation period begins to run at the close of the year in which knowledge of the claim and the identity of the debtor is obtained.
c) Three years in the case of incorporeal works (e.g. building plans, expert opinions). The limitation period begins to run at the close of the year in which knowledge of the claim and the identity of the debtor is obtained.
d) Five years in the case of building structures. The limitation period begins to run with the formal acceptance of the building structure as contractually conform if the defective building material caused the defectiveness of the building structure and the goods were goods used for a building structure (e.g. building materials).
If the goods are not firmly fixed to the building, then the two-year limitation period applies. The same is true if it was the installation and not the material that was defective.
Rental contracts
Claims arising from rental contracts basically have a three-year limitation period.
The law on rental contracts prescribes a six-month limitation period for the following claims (Section 548 BGB):
  • The lessor’s claim for compensation for modifications made to or deterioration of the leased property.
  • The lessor’s claim for making cosmetic (interior) repairs or for payment of a proportional share of the costs of the cosmetic (interior) repairs if there is a proportional share clause in the contract.
  • The lessee’s claim for reimbursement of expenditures.
The limitation period begins to run at the point in time at which the leased property is returned to the lessor. At the point in time at which the lessor’s claim to return of the leased property is barred by limitation, so is his or her claim for compensation.
Commercial agency contracts
All claims in conjunction with the contractual relationships between commercial agents (German: “Handelsvertreter”) and contractors (German: “Unternehmer”) that came into existence or became due after December 14, 2004 are subject to the general three-year limitation period pursuant to Section 195 BGB.
Ancillary claims (Section 87 c HGB) such as the claim for an account settlement or an extract from the accounting books etc. are barred by limitation automatically in conjunction with the purpose they serve. For example, the right to a settlement of accounts lacks merit once the claim for commission is barred by limitation. The same applies to rights to receive information about commission payments once the claim for commission is barred by limitation.

Suspension of a limitation period

Suspending a limitation period means that the limitation period comes to a halt the moment that grounds for such suspension arise, and it continues to run the moment they come to an end.
The period of time for which the limitation period is suspended is not included in the calculation of the limitation period.
The limitation period is suspended:
  • when a right to refuse performance was agreed.
  • from the time negotiations are pending up to a refusal to continue negotiations (the claims are barred by limitation in such a case no earlier than three months after the end of the suspension).
  • in cases of force majeure (which includes when legal representation comes to a standstill).
  • when litigation proceedings are pursued, e.g. filing a law suit, summary debt-proceedings (German: “Mahnverfahren”), petition for conciliation, other proceedings with an officially approved conciliation body, application for litigation costs assistance, setoff, issuance of a third party notice, insolvency proceedings (see Section 204 (1) Nos. 1-14 BGB).
    Excepted from this are the enforcement procedures that trigger the limitation period to begin to run again. The suspension ends six months after a non-appealable decision of a court or any other finalization of the initiated proceedings. When proceedings are not pursued, the last hearing in the proceedings is deemed as the decisive date for the six-month limitation period. The suspension begins again when one of the parties continues on with the proceedings.

Limitation period begins again

When a limitation period begins to run again (Section 212 BGB) it means that after the event that led to the interruption of the limitation period, the entire limitation period begins to run again.
Events that lead to interruptions include:
  • the debtor’s acknowledgement of the creditor’s claim by paying an instalment, making an interest payment, providing security, or by doing something else.
  • the carrying out or application for judicial or public-administrative enforcement procedures. If the enforcement procedures are set aside or the application for enforcement procedures denied or withdrawn beforehand, then the new begin of the limitation period is deemed as not having occurred.

Further Information

This online information can only provide you with a very summarized overview of these topics and does not claim to be complete. If you need more information, you can visit our Commerzbibliothek (Library of Commerce) where you will find all the usual legal literature such as legislation, legal commentaries, collections of judicial decisions, periodicals, and monographs. The Commerzbibliothek is located on the ground floor of the Hamburg Chamber of Commerce at Adolphsplatz 1 in 20457 Hamburg. It is open Monday to Thursday from 10 am to 8 pm and on Friday and Saturday from 10 am to 3 pm.