When does the limitation period start to run about a claim for payment of an invoice for goods or services supplied? Until now, the prevailing view has been that the subjective three-year limitation period, within which an action for payment of an invoice owed was required to be brought for the claim not to be time-barred, began to run on the day after the invoice became due. However, according to a recent decision of the Grand Chamber of the Supreme Court of the Czech Republic, this does not apply (the “Decision”).
In the Decision, the Supreme Court concluded that if the contract stipulates that the basis for payment of the agreed price of performance will be an invoice issued only in the future with an agreed due date, the subjective limitation period does not run from the day following the due date of such invoice, but from the day when the creditor (contractor, seller, etc.) could first exercise the right to payment of the agreed price for services or goods. In other words, from the date on which the creditor could issue an invoice for the first time.
In the Decision, the Supreme Court dealt with the appeal of the appellant, who, as mandatary, concluded on 17 February 2015 a mandate contract with the defendant as mandator, the subject of which was the performance of a set of services for the preparation and implementation of a project consisting in the improvement of the physical infrastructure and related services in the park of the Lipová Castle. These services were divided in the contract into several stages, which were to be invoiced separately in turn. It was also agreed in the contract that the right to invoice the price for the relevant part of the services or activities would arise for the mandatary at the time of completion/provision of the services, but not before 30 June 2015. The contract further provided that the basis for payment of the agreed price for the services in question would be an invoice due 14 days from the date of delivery to the mandator. The appellant, i.e., the mandatary, issued an invoice for the services in question on 31 May 2018, payable on 14 June 2018.
Following the appellant’s action of 30 October 2019 for non-payment of this invoice by the defendant, the Court of First Instance ruled in favour of the appellant. According to the Court of First Instance, the defendant’s objection to limitation was not well-founded, since the three-year limitation period started to run on 15 June 2018, the day after the invoice became due, which makes it clear that the limitation period had not yet time-barred when the appellant’s claim was brought before the Court of First Instance. The Court of Appeal, however, reversed the trial court’s finding and dismissed the action. It disagreed with the conclusions of the court of first instance, concluding that the subjective limitation period began to run not on the due date of the invoice, but on the date on which the appellant was first able to assert its right to payment of the agreed remuneration, i.e., on the date on which it was first able to issue an invoice. The appellant became aware of the fulfilment of the conditions for issuing the invoice on 2 July 2015 (as the facts established) and the limitation period thus time-barred on 2 July 2018, with the result that the defendant’s limitation objection was well founded. The Supreme Court upheld the conclusion of the Court of Appeal and dismissed the appeal.
Conclusions of the Supreme Court on the running of the limitation period
In the context of the assessment of the question when the three-year subjective limitation period according to Section 629 (1) in conjunction with Section 619 of Act No. 89/2012 Coll., the Civil Code, as amended (the “CC”) for the claim for payment of the invoiced amount began to run, the Supreme Court first referred to its earlier decisions relating to the legal situation under the previous legislation.
As to the question of when a right may be asserted for the first time, according to the Supreme Court, it is generally true that a right may be asserted for the first time (according to Section 619 (1) CC) as soon as the possibility to bring an action on its basis arises, i.e., as soon as the moment when the actio nata occurs. This moment occurs, in principle, on the due date of the debt, i.e., the date on which the debtor was obliged to pay the debt for the first time. That date is then the date on which the limitation period according to Section 619 (1) CC starts to run. In the previous literature, it was held that if the creditor can trigger the maturity of the debt, then (objectively speaking) he can also enforce his right (bring an action in court). The Supreme Court here followed the conclusion previously formulated by the Supreme Court of the Czechoslovak Republic in its decision R 28/1984. There, it concluded that if the time for performance is not agreed upon, fixed by law, or determined in a decision, the limitation period begins to run on the day following the date on which the debt was incurred, i.e. on the day on which the creditor could (within the meaning of Section 78 of Act No. 40/1964, Civil Code, as in force until 31 December 1991, the “CC 1964”) request the debtor to perform and thus (objectively assessed) also enforce his right (Section 101 CC 1964). The limitation period therefore did not begin to run in those cases on the day following the day on which the debtor was asked by the creditor to perform, but on the day on which the creditor was first able to ask the debtor to perform. Those conclusions do not apply to situations where, according to the agreement of the parties, the time for performance was left to the debtor’s will, if it was agreed that the debtor would pay when he was willing or able.
Under the same regime for the commencement of the limitation period, an arrangement under which the debtor pays within a specified period of days after receipt of the bill is also considered under R 28/1984. This means that the limitation period in such a case should have started to run from the date on which the creditor could have first demanded performance. According to the Supreme Court, this is a situation analogous to an agreement on the due date of an invoice, and therefore this conclusion applies here as well.
The Supreme Court, in particular referring to its previous decisions and interpretation of the relevant provisions of both the CC, the CC 1964, and the Commercial Code, concluded that if the creditor has the right under the contract to demand payment of the agreed price of performance, while the time, when the debtor is to perform the debt is specified in the contract only in such a way that the basis for payment of the agreed price of performance is an invoice issued by the creditor, the due date of which is agreed to be 14 days from its delivery to the debtor, then, within the meaning of Section 1958 (2) of the CC, the situation where the parties have not agreed when the debtor is to fulfil the debt and where the determination of the time of fulfilment of the debt is left to the creditor’s will. The creditor may determine the time for performance of the debt by requesting payment ‘immediately’ after the right to demand payment of the agreed price of performance has arisen and the debtor is obliged to perform the debt within a period of ‘without undue delay’ calculated from the receipt of this request. On the expiry of that period, the monetary debt shall become due and payable.
The circumstances decisive for the commencement of the limitation period are, within the meaning of Section 619 (2) CC, the circumstances from which the creditor knew or should have known and could have known that he had the right to determine the time of performance of the debt. The three-year subjective limitation period according to Section 629 (1) CC starts to run from the date on which the creditor knew or should have known and could have known that he had the right to determine the time for performance of the debt.
Development of decision-making practice
Until the CC came into force on 1 January 2014, the Supreme Court followed the conclusions set out in R 28/1984 in relation to Section 101 CC 1964. After the CC came into force, it was necessary to deal with the question of whether the legislative shift reflected in the regulation of the statute of limitations in the CC, in particular with regard to the wording of Sections 619 and 629 CC, led to the need to correct the conclusions arising from the decision-making practice in the context of the previous legislation or whether they could be adopted in the context of the CC. The Supreme Court has followed the path of earlier interpretations and in particular the path and reasoning set out in decision R 28/1984. That is to say, the conclusions adopted when the 1964 CC was in force are also applicable in the context of the CC.
It should be noted that even the commentary literature on this topic has not been and is not unanimous and differs quite noticeably in its interpretations of the relevant provisions of the CC. The linking of the beginning of the limitation period to the due date of the claim is considered correct by the specialised literature, led by Weinhold, D.: Statute of Limitations and Prescription in Private Law , Melzer, F., Tégl, P. et al.: Civil Code – a large commentary. Volume III or Pražák, Z., Fiala, J., Handlar, J. et al. Commentary on Section 1721-2893 CC . The opposite conclusion, namely that when the maturity of the debt has not been agreed by the parties and is not otherwise determined, the limitation period begins to run on the day following the day on which the claim arose, regardless of the maturity of the claim, is supported by, for example, Lavický, P. et al. Civil Code I. General Part (Section 1 to 654). Commentary or Petrov, J., Výtisk, M., Beran, V. et al. Civil Code. Commentary.
What will this mean in practice?
The factual circumstances in which the Supreme Court adopted the Decision are quite common in practice and especially in business dealings. It is very common to encounter a contract whose object is a certain type of performance and whose consideration is the payment of an agreed price (contract for work, contract of mandate, contract for the provision of services, etc.). The contract usually stipulates that the price/fee is not due on a fixed date, but within a certain period after the invoice has been issued and delivered. At the same time, the time within which the invoice is to be issued is usually not agreed. In the context of the Decision, what is relevant in this situation is when the creditor could first claim the debt, i.e. generally when the invoice was first issued. The limitation period starts to run from that moment, irrespective of whether and when the invoice was issued.
Particularly in the case of more complex contracts (such as the preparation of tender documentation or documents for obtaining subsidies), there may be a significant delay between the completion of the work and the issue of the invoice. In such circumstances, the limitation period may be significantly shortened by issuing the invoice triggering the due date after the limitation period has started. Thus, in this setting, the limitation period starts to run before the debt becomes due. The Supreme Court was aware of some controversy surrounding this conclusion and therefore also expressly stated in the reasoning of the Decision that the Supreme Court’s conclusions in the Decision consider the general legal principle of ‘vigilantibus iura scripta sunt’, which requires creditors to guard their rights and to exercise them in a timely manner.
According to the Decision, in a situation where the parties have not agreed when the debtor is to fulfil the debt and where the determination of the time of fulfilment of the debt is left to the creditor’s will – e.g., by agreeing that the basis for payment of the agreed price is an invoice issued by the creditor, the three-year subjective limitation period according to Section 629 (1) CC from the date on which the creditor knew or should have known and could have known that the right to determine the time of performance of the debt had arisen (most often by completing the agreed work or part thereof).
In practice, the widespread opinion is that the invoice receivable becomes due 3 years after the due date stated on the invoice. Especially in cases where the invoice will be issued with a significant delay, a creditor may have an unpleasant encounter with current case law when suing for the amount owed before the end of the presumed due date. In other words, there is no rule that a claim on an invoice is time-barred 3 years from the due date.
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 Judgment of the Supreme Court of the Czech Republic of 31 May 2023, Case No. 31 Cdo 3125/2022
 See the judgment of the Supreme Court of the Czech Republic of 28 November 2019, Case No. 33 Cdo 3037/20
 Judgment of the former Supreme Court of the Czechoslovak Socialist Republic of 30 November 1981, Case No. 3 Cz 99/81, published under No. 28/1984 Coll.
 WEINHOLD, D.: Statute of limitations and prescription in private law. First edition. Prague: C. H. Beck, 2015, pp. 70 ff.
 MELZER, F., TÉGL, P., et al.: Civil Code – a large commentary. Volume III. Section 419-654. First edition. Prague: Leges, 2014, pp. 946 ff.
 PRAŽÁK, Z., FIALA, J., HANDLAR, J., et al.: Obligations arising from juridical acts under the Civil Code. Commentary on Section 1721-2893 CC. Prague: Leges, 2017, p. 531.
 LAVICKÝ, P., et al.: Civil Code I. General part (Section 1 to 654). Commentary. 2nd edition. Prague: C. H. Beck, 2022, pp. 2004 ff.
 PETROV, J., VÝTISK, M., BERAN, V., et al.: Civil Code. Commentary. 2nd edition (1st update). Prague: C. H. Beck, 2022, pp. 688-689.
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26. 10. 2023