Meaning and Function of Limitation in Civil Law

Limitation (Verjährung) serves legal peace and legal certainty. The standard limitation period is three years. Unless a different start of the limitation period is specified, the standard limitation period begins at the end of the year in which the claim arose and the creditor obtains knowledge of the circumstances giving rise to the claim and of the identity of the debtor, or would have obtained such knowledge but for gross negligence.

If limitation occurs, this does not extinguish the claim itself but entitles the debtor to refuse performance. The claim thus continues to exist in substance but is no longer legally enforceable.

For companies as well as private individuals, this results in the need for continuous monitoring of outstanding receivables and contractual claims. Proper deadline monitoring and the timely initiation of measures suspending the limitation period (e.g. by filing an action, applying for a default summons (Mahnbescheid) or entering into negotiations) are essential in order to avoid the loss of rights.