3. Limitation of Actions

The limitation of actions or "statute of limitations" provision imposes a contractual limitation on the period of time within which a party may bring a lawsuit against the other party. These provisions are used to circumvent the normal period of time under applicable law that a party would have to file a suit. For example, in many jurisdictions, the period within which a party must bring an action for breach of contract is four years from the date of the breach. Section 11.3 of the vendor form agreement would change that period to one year. Also note that Section 11.3 applies only to claims by the customer. While the licensee may feel comfortable putting some limit on the length of time within which a lawsuit must be brought, that limit should generally not be less than two or three years. In addition, the licensee should insist that any limitation of actions provision apply equally to both parties.

Example Revision:

11.3 Limitation of Actions. Neither party ~~Customer~~ shall ~~not~~ bring any action against the other party ~~Vendor~~ arising out of or related to this Agreement or the subject matter hereof more than three ~~one~~ (13) years after the occurrence of the event which gave rise to such action.