When a small- or medium-sized business in the Fairfax or Arlington, Virginia region discovers a contract breach, one of the first questions is whether the statutory deadline for filing a claim has expired. Under Virginia law, the limitations period is critical, but it is not always the full story. Certain exceptions may toll (pause) or otherwise extend the time within which a claim may be brought even after the breach has occurred. This blog examines three common exceptions, fraudulent concealment, continuing performance (or continuing obligation), and equitable estoppel, and how they relate to commercial litigation in Virginia.
Limitations Period for Breach of Contract
Under Virginia law, the statute of limitations for breach of contract claims typically runs from the date the cause of action accrues. For example, claims based on a written contract generally must be filed within five years of accrual; for unwritten contracts, the period is typically three years.
More specifically, for certain computer-information transactions, the statute provides, “an action must be commenced within the later of four years after the right of action accrues or one year after the breach was or should have been discovered, but not later than five years after accrual.”
In the commercial context, that means a business must remain vigilant in filing within the applicable window or identify whether an exception may apply.
1. Fraudulent concealment
One of the most well-established exceptions is when the defendant takes affirmative steps to conceal the cause of action (i.e., the breach). In Virginia, under Virginia Code § 8.01‑229, tolling is available in certain circumstances.
How it Works
If a breaching party intentionally misrepresents or hides facts so that the injured party cannot discover the breach, then the clock on the limitations period may be paused until discovery of the concealed breach. For example, in Virginia legal commentary, “Where a defendant affirmatively acts to conceal a cause of action, the statute of limitations is tolled until the concealment is discovered.”
Key Elements
- An affirmative act of misrepresentation or concealment (mere silence typically is insufficient).
- The concealment must impede the discovery of the cause of action.
- The injured party must not have discovered or reasonably should not have discovered the claim because of the concealment.
Commercial Litigation Scenario
A company in Arlington contracts with a vendor to supply specialized equipment. The vendor provides monthly reports that suggest compliance, but in fact quietly changes materials in violation of the contract. If the vendor intentionally misleads the company about the substitution, the company may argue that the limitations period was tolled until the company discovered (or reasonably should have discovered) the breach.
Practical Considerations
It remains incumbent on the injured party to show both concealment and reasonable diligence. If the injured party delayed unreasonably, the tolling argument may fail. Also, the exception does not convert a long-expired claim into an indefinite one, as courts will still examine whether the delay was justified and whether prejudice resulted.
2. Continuing Performance / Continuing Obligation (Sometimes Described as Continuing Breach)
Another scenario that may extend the deadline is where the breaching party’s obligation continues over time, rather than a one-time act. In Virginia, while the doctrine is less frequently labeled “continuing performance,” similar concepts may apply under commercial litigation.
Concept
When a contract includes an ongoing obligation (for example, recurring delivery, maintenance, or performance over a period of time), the cause of action may accrue at the time of the last breach or performance rather than the initial breach. In other words, each failure may reset the clock, or at least mean that the limitations period begins later. While Virginia precedent is less robust under that label, courts elsewhere describe it as the “continuing violations doctrine.”
Virginia Application
Though Virginia rulings specifically on “continuing performance” in contract breach are fewer, the principle to watch is whether performance was ongoing and whether the injured party could reasonably treat the obligation as continuing rather than terminated. If so, accrual may occur later, and thus the limitations period may not yet have begun in full.
Commercial Litigation Scenario
A small business in Fairfax enters a multi-year service contract with a provider for monthly software updates and support. The provider fails to perform updates for several months, then resumes. The business may contend that the breach is ongoing and the limitations period has not yet begun to run for the final missed update. That might extend the window to file a lawsuit compared to a one-time breach.
Practical Considerations
Determining accrual under a continuing obligation requires careful review of contract terms, the nature of the performance, and when the last breach occurred. If the contract clearly terminates obligations at a certain date, or if the performance is not truly ongoing, courts may decline to apply the doctrine.
3. Equitable Estoppel
Equitable estoppel is a doctrine by which a party may be precluded from asserting a statute of limitations defense if its own representations or conduct induced the other party to delay filing. In Virginia commercial litigation, this can matter when a breaching party leads the injured party to believe a claim need not be asserted right away.
How it Works
Under federal precedent and Virginia case law, equitable estoppel may allow tolling when:
- The defendant misleads the plaintiff.
- The plaintiff relies on the misleading conduct.
- The reliance causes the plaintiff to delay filing.
For example, in a Virginia appellate case, the plaintiff argued the doctrine of equitable estoppel against a statute of limitations defense. The court held the plaintiff bore the burden to prove entitlement to tolling under equitable estoppel and found the evidence insufficient.
Commercial Litigation Scenario
Imagine a contractor in Arlington repeatedly assures the business owner that it will remedy defects, and the business owner reasonably relies on that assurance and delays filing its claim. If the contractor’s assurances were misleading and induced delay, the business might argue that equitable estoppel bars the contractor from asserting the statute of limitations defense.
Practical Considerations
Equitable estoppel is fact-intensive. The injured party must show reliance and justification for delaying the claim. The breaching party may argue that the injured party should have discovered the breach earlier or pursued the claim. Moreover, Virginia law emphasizes that tolling must not unduly prejudice the defendant or undermine the purpose of limitation statutes.
At Jabaly Law, we understand that timing can be critical in breach matters. As your experienced breach of contract lawyer and commercial litigation attorney, we assess potential breach exceptions to the deadline and develop strategies to safeguard your business interests. We provide tailored legal counsel services for businesses of all sizes in Virginia, helping clients address disputes with precision and professionalism.
Contact our dedicated team of business lawyers to discuss your situation and available legal options.
