Currently, written instruments controlled by Pennsylvania law have had two different statutes of limitation. Most written contracts must be enforced within a four-year statute of limitations.
After that, an action brought to enforce the written contract can be barred by the defendant asserting the statute of limitations defense.
However, the four-year statute of limitations did not apply to all written agreements. Agreements made “under seal” enjoyed a twenty-year statute of limitations rather than the general four-year statute. To designate an agreement as being under seal, the word “seal” is placed next to the signature line.
In June 1998, Pennsylvania enacted a law providing that the twenty-year statute of limitations would expire effective June 27, 2018. 42 Pa.C.S. § 5529(b)(2). The twenty-year lag from passage was designed to “grandfather” pre-existing contracts made prior to June 18, 1998 until the twenty-year enforcement period expired.
On June 27, 2018, the twenty-year statute of limitations expires, which means that contracts will be subject to the same four-year statute of limitations, regardless of whether they are made “under seal.”
As our commonwealth phases out agreements under seal, it is now time for businesses to review potential causes of action arising under applicable contracts. In a little bit over a month, most contract claims arising prior to June 27, 2014 will likely be rendered unenforceable by the change of this law. On the other hand, if your business is facing a contingent liability that is more than four years old resulting from an agreement made under seal, June 27 might just be your day of deliverance.
For more information, please contact Josh Baker or another member of our litigation group.
This post was written by Joshua Baker and Matthew Rak.