On March 16, 2021, Governor Mike DeWine signed Ohio Senate Bill 13, shortening Ohio’s statute of limitations on a variety of claims. While the impact of the bill on numerous causes of action is widespread, of particular note is the impact on contract-based claims. Effective June 14, 2021, Ohio will reduce the statute of limitations for claims premised on written contracts from eight years to six years, and for claims premised on oral contracts from six years to four years.
This reduction applies to claims that accrue on or after June 14, 2021. Written contract claims that accrue prior to June 14, 2021 must be brought within the time remaining under the prior eight-year limitations period or by June 14, 2027, whichever is earlier. Oral contract claims that accrue prior to June 14, 2021 must be brought within the time remaining under the prior four-year limitations period or by June 14, 2025, whichever is earlier. While the statute does not define the accrual date for causes of action on written or oral contracts, other portions of the Ohio Revised Code define accrual of a cause of action as the date a breach of contract occurs.
The referenced changes to the statute of limitations apply only to contracts covered by R.C. 2305.06 and 2305.07(A). Statutes of limitations for other contract based claims, including claims against the State (R.C. 126.301), claims premised on contracts for the sale of goods (four years – R.C. 1302.98), claims premised on certain promissory notes (six years – R.C. 1303.16), Consumer Sales Practices Act (CSPA) claims (two years – R.C. 1345.10) and claims for the recovery of real estate (twenty-one years – R.C. 2305.04) are specifically exempted and remain unchanged.
Ohio Senate Bill 13 also creates a brand new six-year statute of limitations for consumer transactions, defined in R.C. 2305.07(C) as a transaction “incurred primarily for personal, family, or household purposes, based upon any contract, agreement, obligation, liability, or promise, express or implied, including an account stated, whether or not reduced to writing or signed by the party to be charged to that transaction.” Ohio R.C. 2305.07(C) further defines accrual of a cause of action on a consumer transaction claim as “thirty calendar days after the date of the last charge or payment by, or on behalf of, the consumer, whichever is later.”
One exception of note, however, involves an addition to R.C. 2305.03 — Ohio’s “Borrowing Statute.” Ohio Senate Bill 13 creates two new subsections to R.C. 2305.03, mandating that any claim premised on a written contract or agreement, and any claim premised on a consumer transaction, written or oral, that seeks post-default interest in excess of Ohio’s statutory interest rate set forth in R.C. 5703.47, will not be governed by the statutes of limitations set forth in R.C. 2305.06 and 2305.07(A). Rather, the statute of limitations of the state law that applies to the contract (choice of law provision) will apply to any such claims, potentially reducing the limitations period to bring claims in Ohio, and precluding the filing of any such claims in Ohio on which the referenced out-of-state statute of limitations has already lapsed.
If you have any questions about this article or about the impact of Ohio Senate Bill 13 on your business, please contact our firm.