Can You Agree to Extend the Statutory Limitation Period for Unjust Enrichment?

One of the recently unresolved legal questions has been whether parties can, within the framework of contractual autonomy, agree to a longer limitation period for claims related to unjust enrichment. This issue was highlighted in the decision of the Supreme Court of the Czech Republic on December 6, 2023, case number 32 Cdo 2444/2023, which addressed the interpretation of Section 630 of the Civil Code, governing the possibility of contractual extension or reduction of the limitation period.

Basic Legal Framework for Limitation

Limitation periods are designed to protect legal certainty and the rights of debtors. According to Section 629 of the Civil Code, a right is extinguished by limitation after three years from the day when the right could first be asserted.

However, Section 630 of the Civil Code allows parties to agree on a longer or shorter limitation period, provided that such an agreement does not disadvantage the "weaker party" and does not contravene good morals or public order. It is also not possible to shorten the limitation period for rights arising from intentional breach of duty or in cases involving harm to health, freedom, or life.

Divergent Expert Opinions

Up until now, expert literature has been divided on whether parties can agree to a longer limitation period for obligations arising outside of contracts, such as obligations arising from unjust enrichment.

Some sources have argued that the possibility of extending the limitation period does not apply to unjust enrichment and is limited only to contractual obligations, as unjust enrichment arises regardless of the parties' will, and the right to its restitution becomes due regardless of the creditor's knowledge of its occurrence. This approach was motivated by the desire to protect debtors and ensure legal certainty (see, for example, SVOBODA, K. In: ŠVESTKA, J., DVOŘÁK, J., FIALA, J., et al. Civil Code. Commentary. Volume I (§ 1 to 654). 2nd edition. Prague: Wolters Kluwer, 2020, § 630, marginal note 2).

In the case mentioned above, decided by the Supreme Court, the appellate court adopted this conclusion of limiting the extension of the limitation period to only contractual relationships.

Other sources take the opposite view, asserting that agreeing on a shorter or longer limitation period is generally permissible for all rights subject to limitation, regardless of the legal basis for their origin (whether arising from legal acts, torts, other legal facts, or directly from the law). According to these sources, the only exception is the reduction of limitation periods for rights listed in the second sentence of Section 630(2) of the Civil Code (see BRIM, L. In: LAVICKÝ, P., et al. Civil Code I. General Part (§ 1–654). 2nd edition. Prague: C. H. Beck, 2022, § 630, marginal note 24).

Supreme Court's Decision

In its decision mentioned above, the Supreme Court resolved the various interpretations and supported the possibility of extending the limitation period even for unjust enrichment claims. The Court argued that the law does not explicitly prohibit the contractual extension of the limitation period for unjust enrichment and that such a possibility is in line with the principles of contractual autonomy and the dispositive nature of civil law.

The Supreme Court also noted that the limitation period for obligations arising from unjust enrichment can also be shortened. Whether the limitation period is agreed to be shortened or extended, it must comply with the statutory limits for shortening (minimum of 1 year) and extending (maximum of 15 years) the limitation period.

Summary and Conclusion

The Supreme Court's decision provides greater legal certainty and clarifies that parties can agree to a longer limitation period for unjust enrichment claims. This possibility aligns with the principles of autonomy of will and contractual freedom, which are considered key principles in modern civil law.

This decision opens doors for businesses and other entities to better tailor their obligations, not limited to contractual relationships. However, statutory limits concerning the length of the limitation period and the protection of weaker parties must always be observed.

Need help setting up contractual documentation to your advantage? In many cases, it is also necessary to consider issues related to limitation. We would be happy to prepare your contractual documentation, focusing on protecting your rights and interests. Feel free to contact us.