The Compendium

General liens may be important in insolvency situations, as they may take priority over the rights of other creditors to whom the debtor owes money.

A lien may end in a number of different circumstances which include where:

• The debtor discharges its obligations in respect to the lien. Usually, this will be the payment or tender of payment for the debt.
• The parties agree to discharge the lien, or one of them waives their rights under it.
• The holder of the lien does some act to terminate the lien, such as transferring possession of the property to a third party.

Limitation Period

The Limitation Act 1980 imposes time limits (often referred to as ‘limitation periods’) within which a party to a contract must bring a claim, or give notice of a claim to the other party.

Claims outside of these periods are called ‘statute barred’; in other words, action cannot be taken once the period has expired. An example is, if an officeholder has requested creditors to send in proofs of debt and evidence of their claims and one sends in evidence of a debt that arose seven years ago. This will be outside the ‘limitation period’ of six years, so that claim cannot be made.

There is an exception to this rule. If an action has been taken on that contract since its inception (beginning), and within the six year period, the limitation period will run from the date of the action, not the date of its commencement.

There are different limitation periods for different types of cause of action. A ‘cause of action’ is one under ‘contract’, or ‘the tort of negligence’, etc.

This period is six years for a normal contract claim … … and 12 years if the contract was created by deed (usually this is one that involves land, or large commercial contracts).

[See ‘ Statute Barred’ and ‘Proof of Debt’.]