Beware contract provisions that shorten the statute of limitations

Beware the “predispute agreement” to shorten a period of limitation (i. e., the time within which an aggrieved party must file a lawsuit or risk waiving his or her right to do so!)

I have seen it happen more than once. A potential client comes to me and tells me that the other party has breached their contract. “Let me see the contract” I ask. Among the first provisions in the contract I will check after looking to see if there is an attorney’s fee provision, choice of law provision (what state’s law will govern,” forum selection provision (where [what state] will the dispute be litigated), and a few other items, I check to see if any language purports to shorten the otherwise applicable “statutes of limitation” (i. e., the time period[s] within which a lawsuit must be filed). Some might ask, is this permitted? Seems a little bit sneaky.

There is no distinction to be made on the ground of public policy between the right of a party to waive the plea of bar of a statute of limitations as a defense to an action [see Code Civ. Proc. § 360.5], and his or her right to waive, by private agreement before the fact, a portion of the time granted by the applicable statute for commencement of an action [Tebbets v. Fidelity & Cas. Co. (1909) 155 Cal. 137, 139, 99 P. 501]. Hence, the parties to a contract may stipulate in the contract for a period of limitation shorter than that fixed by the applicable statute; this does not violate public policy if the period fixed is not so unreasonable as to show imposition or undue advantage in some way [Beeson v. Schloss (1920) 183 Cal. 618, 622, 192 P. 292; see Hambrecht & Quist Venture Partners v. American Medical Internat., Inc. (1995) 38 Cal. App. 4th 1532, 1547–1548, 1549 n.17, 46 Cal. Rptr. 2d 33].