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Abstract:
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This article suggests a rationale for statutes of limitations in sales law, i.e. for the practice of cutting off buyers’ remedies after the expiration of a limitation period. The rationale is based on the notion of wear and tear, which carries two implications: First, a good that breaks down after several periods of use is likely to be of nearly optimal quality, and in this case little is gained by allowing a claim. Second, the number of dysfunctions is likely to increase over time, which implies that the pool of potential claims, and in particular the pool of unjustified claims, is likely to increase over time. It will be shown theoretically that these implications can provide a rationale for cutting off claims. The rationale will be supported with empirical evidence stemming from a recent extension of the limitation period from one to two years in Denmark. |
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