In enterprise operations, managing debts not only affects cash flow and the financial stability of the enterprise but also plays a crucial role in protecting legal rights. If a enterprise fails to control its debts in a timely manner, not only does the financial risk increase, but there is also the danger of losing the right to sue when debts become overdue.

This article will analyze in detail the serious consequences that a enterprise may face if it neglects debt management, particularly the risk of losing the right to sue, which makes it difficult for the enterprise to recover debts and protect your rights under the law.

1. What is the Statute of Limitations for Lawsuits?

The statute of limitations for a lawsuit is the time frame within which a enterprise or any entity has the right to file a claim in court to resolve a civil case to protect the legitimate rights and benefits that have been violated. Once this period expires, the right to sue is lost, except in certain special cases where the law does not apply the statute of limitations. This concept is crucial for enterprise in the context of debt recovery.

• Within the statute of limitations: Enterprises have the right to proactively file a lawsuit in court to demand resolution of outstanding debts. This not only protects financial benefits but also creates legal pressure on the debtor, increasing the chances of successful debt recovery.
• After the statute of limitations expires: Enterprises will lose the right to sue, meaning they can no longer request court intervention to recover debts. At this point, the benefits of the enterprise will be severely harmed, especially when it can no longer use legal measures to protect itself.

Understanding the statute of limitations for a lawsuit helps enterprise manage debts effectively and protect their legal rights against the risk of losing the right to sue. Strict control of debts and taking timely legal action are essential factors in ensuring financial safety for the enterprise.

2. How long is the statute of limitations?

The statute of limitations depends on the nature and type of contract that the enterprise or individual participates in, and each type of contract will have a different time period to initiate a lawsuit when rights are violated. Understanding this statute helps the parties involved protect their rights in a timely and effective manner.

For civil contracts: Common civil contracts, such as property purchase agreements or loan agreements, have a statute of limitations of 3 years from the date the entitled party knew or should have known that their legal rights and benefits were violated.

For example, if a enterprise signs a contract to purchase office furniture from an individual, and the seller, after receiving the advance payment, does not deliver the product as agreed, the legal rights and benefits of the enterprise are clearly violated. In this case, the enterprise will have 3 years from the time the partner violates the contract to sue, requesting the court to compel the partner to fulfill the obligations stipulated in the contract, such as paying penalties, compensating for damages, and other obligations under provisions of the contract. If the enterprise does not take legal action within this time frame, they will lose the right to sue after the 3-year statute of limitations ends.

For commercial contracts:

In commercial contracts such as sales contracts or service contracts, the statute of limitations is 02 years from the date the legal rights of the damaged party are violated. For example, a enterprise provides transportation services to a partner, but the partner does not fully pay the fees as agreed in the contract. In this case, the statute of limitations is 02 years from the date the business knew or should have known that the partner breached the contract. 

In both cases mentioned above, the statute of limitations is a crucial factor that helps enterprise protect their rights through legal measures. If enterprises do not act in a timely            manner within the specified period, they will lose the right to request court intervention. Therefore, enterprises need to actively manage debts, understand the statute of limitations, and act promptly to avoid losing legal rights. This is not only a financial protection measure but also ensures transparency and efficiency in commercial transactions.

3. Determine the statute of limitations for a lawsuit in debt recovery 

Accurately determining the statute of limitations plays a crucial role in protecting the legal rights of enterprise. To ensure that the right to sue remains valid, enterprise need to clearly understand how to determine the statute of limitations based on factors related to the exchange and confirmation of debts. Below is a detailed analysis of methods for determining the statute of limitations based on communication evidence and exchanges between the parties.

Determine the last time the parties discussed about debt: One of the primary factors in determining the statute of limitations is the last time when the parties exchanged or negotiated about the debt. Therefore, tracking and documenting these exchanges is essential to accurately pinpoint the starting point for calculating the statute of limitations.

Example: If, during the negotiation, the debtor of enterprises acknowledges the debt in a meeting that is recorded in minutes, that time may be considered the final timestamp for determining the statute of limitations. This can extend the time for filing a lawsuit, especially in cases where the debtor acknowledges the debt but delays payment.

Identify through main communication channels (Email, Zalo, etc.): Communication methods such as email, messages via Zalo, or similar applications can also serve as a basis for determining the statute of limitations.

Example: An email from a partner acknowledging the outstanding debt or promising to pay by a specific date can be used to establish the starting point for the statute of limitations.

Identify through the date of the debt reconciliation document: A debt reconciliation document is an important record for confirming the status of debts between the parties. The date of signing or issuing this document can be regarded as the starting point for calculating the statute of limitations. The reconciliation document not only records specific figures regarding the debt but also clearly outlines the obligations of both parties.

Identify through the final response dispatch regarding the debt: The final response dispatch between the parties concerning the debt is also a factor in determining the statute of limitations. A formal written response can potentially extend the time for filing a lawsuit, especially if the debtor acknowledges the debt or proposes new payment agreements.

Example: If a enterprise sends a dispatch for payment request and receives a response dispatch from the partner acknowledging the debt but requesting an extension for payment, the date of receiving this response will be a crucial timestamp for determining the statute of limitations for a lawsuit.

Accurately determining the statute of limitations is extremely important in the debt recovery process and in protecting the legal rights of the enterprise. Communication methods, reconciliation documents, and response dispatches are essential legal bases that help the enterprise pinpoint the right moment to take action. Failing to correctly identify this timeframe puts the enterprise at risk of losing the right to sue, complicating the recovery of debts. Therefore, carefully retaining and managing documents related to debts is a critical step in safeguarding the enterprise’s benefits.

When a enterprise discovers that the statute of limitations for debts is about to expire, this can pose serious risks if no timely measures are taken. The expiration of the statute of limitations means the business loses the right to request court intervention to resolve disputes, leading to potential losses of unrecoverable debts. Thus, re-establishing the statute of limitations is necessary to ensure that the enterprise’s legal rights remain protected if disputes are brought to court. Under Vietnamese law, the statute of limitations can be “reset” when certain actions or legal events occur related to the debt. Measures to reset the statute of limitations may include the debtor acknowledging the debt, agreeing to extend the payment period, or any form of communication or agreement between the parties regarding the debt. These actions serve to interrupt the previous statute of limitations and start a new one, allowing the enterprise additional time to address disputes, except in certain special cases.

Time of writing: 16/10/2024

The article contains general information which is of reference value, in case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer  at  info@cdlaf.vn

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