When it comes to preserving your right to sue on a debt, understanding acknowledgments and what they entail under The Limitation Act, 2002, S.O. 2002, Chapter 24, Schedule B is important.
It is well known that, under The Limitation Act, a two-year basic Limitation period is stipulated under Section 4.
In addition to the basic limitation period, the Act also provides for instances where the two-year clock is effectively re-set, thereby preserving one’s right to commence an action. This is found in Section 13 of the Act, which interprets the types of acknowledgements needed to keep the clock ticking.
One of the more basic acknowledgments is payment towards a debt. Payment on a debt will restart the two-year time limit to commence an action on the remaining balance, however, it is critical to understand that the payment must occur within the two-year period prescribed by the Act otherwise the action will not survive. In other words, any acknowledgments made outside the limitation period will not revive the time.
Another important point for practitioners to remember is that an offer to settle does not constitute an acknowledgment of debt.
Lastly, please be mindful of the digital age we now find ourselves living in.
Courts are now holding that text messages can constitute an acknowledgment of debt as well as affixing electronic signatures.
If you ever have any questions about the clock, please reach out to our intelligent team.
Zach Sternberg, JD , Associate Lawyer