Statute of limitations with 2 examples

When you hear about statute of limitations it simply means any person in law who has a legal right of action has limited period in which to enforce his or her right.

If action is not taken within the given period, it is said to be statute barred. This simply means that no action will be entertained in the court of law on it.

Section 7 (1) of the limitation Act of 1966 states that action cannot be brought after six years from the date on which the action accrued on acts founded on a simple contract in a Statute of limitations.

Section 7 (6) of the Acts provides that no arrears of interest on any debt shall be recovered after the expiration of 6 years, and after the interest became due while section 11 (1) gave 12 years as maximum period (from commencement of action) to be entertained on specialty contracts in a statute of limitations.

A specialty contract is one which is expected to be made under seal.

Thus, where debts is secured by a mortgage on real property, action to recover it can be brought within 12 years from the date when the cause of action first arose while it can be done within 6 years on guarantee and equitable charges.

Note that where land is involved, the title documents should be returned on debt being statute barred in a statute of limitations.

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Effects of statute of limitations on banking accounts

After the time limit have elapsed, the debt automatically becomes statute barred and right of action is lost even though the debt still remains owing.

This is why in a statute of limitations, action cannot be brought to enforce payment of statute barred debt but such can be voluntarily repaid in part or in full.

The two statute of limitations in banking accounts are as follows;

1. Credit Accounts,

In a statute of limitations on banking accounts, deposit in bank account is repayable only on demand. Ordinarily, statute of limitations periods starts from when the customer make the demand.

This is why limitation does not affect credit balance.

In practice, unclaimed credit balances are transferred to dormant account (unclaimed balance account) from where such accounts are reactivated when the need arise.

It should be noted that in a statute of limitations, credit account cannot be statute barred. This is because demand for payment need to be made is effected.

Take for example, in Yusuf V Co-operative bank Ltd (1994) the plaintiff sought account declaration that his credit balance with the bank which stood at £534.5 as at 1971 when the account was last operated was N2,211955.35 in 1986 when the action was brought.

The defendant bank contention that the action was a statute barred become the subject of the ruling that followed.

The trial judge held the bank’s contention must fail.

The reason being that the bank cannot pay without account customer’s demand and since no demand was made to which the bank failed to pay, the statute bar principle in a statute of limitations cannot apply.

2. Statute of limitations on debit account

In credit administration, bank always make demand for payment on non performing accounts.

The limitation will start to run from the date of last operation (that is lodgement or withdrawal) in the account or date of last acknowledgement in writing duly signed by the debtor.

In statute of limitations on debit account, demand is deemed to be necessary for the right of action – Johnson (Liquidator of merchant bank Ltd) V Odeku (1967).

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Recommencement of limitation period

Statute of limitations

In a statute of limitations, a statute barred right of action can be reopened in many ways including;

1. Part payment of principal debt or interest by a customer (debtor). Such payment will commenced the limitation period for the whole debt against the customer and parties thereto.

However, if repayment was done after the debt has become statute barred, it will only recommence against the party making the repayment.

2. Acknowledgement of debt in writing which is dated and signed recommence the limitation period against the customer and this is without prejudice to a statute barred account in statute of limitations.

Please note that where security is merely equitably charged, it may not be realized after the remedy for the recovery of the debt is barred as in the case of National Bank of Nigeria Ltd V Peters & Fetuga (1971).

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Statute of limitations examples

Some statute of limitations examples includes the followings cases;

1. Yusuf V Co-operative bank Ltd (1994) the plaintiff sought account declaration that his credit balance with the bank which stood at £534.5 as at 1971 when the account was last operated was N2,211955.35 in 1986 when the action was brought.

The defendant bank contention that the action was a statute barred become the subject of the ruling that followed.

The trial judge held the bank’s contention must fail.

The reason being that the bank cannot pay without account customer’s demand and since no demand was made to which the bank failed to pay, the statute bar principle in a statute of limitations cannot apply.

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