Commercial contract claims turn on the merits, but they are constrained by three things decided long before trial: when the limitation period expires, whether the pre-action steps were followed, and what the claim costs to run relative to what it is worth. Issue for £60,000 and the court fee alone is £3,000 before anyone drafts a defence.
This sets out the timetable, the procedure and the money for a breach of contract claim in England and Wales, with each rule linked to its source.
Six years, running from the breach
Section 5 of the Limitation Act 1980:
"An action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued."
Section 8(1) gives twelve years to a contract executed as a deed:
"An action upon a specialty shall not be brought after the expiration of twelve years from the date on which the cause of action accrued."
Section 8(2) qualifies it: the twelve years does not apply where the Act prescribes a shorter period for that kind of claim. The one that bites commercially is section 19 — arrears of rent, and damages for arrears, are six years from the date they fell due, even under a lease executed as a deed.
The words that do the damage are "from the date on which the cause of action accrued". In contract the cause of action accrues at the breach — not when you discovered it, not when the loss crystallised, not when the relationship finally broke down. A defective installation in 2019 noticed in 2025 is, in contract, a 2019 claim.
Three practical points follow:
- Check whether the contract was executed as a deed before assuming six years. The answer is on the execution page — and then check that nothing shorter in the Act applies to the particular claim.
- Where there is a continuing obligation, identify which breach you are suing on. A separate breach can start its own period; a single repudiation does not restart on each missed payment.
- Pre-action correspondence does not stop time. Paragraph 17 of the Practice Direction on Pre-Action Conduct says the pre-action rules "do not alter the statutory time limits for starting court proceedings".
Two things that can move the date
The six years is the ordinary rule, not an absolute one, and the exceptions are common enough in commercial disputes to check every time.
Acknowledgment or part payment restarts the period — for a debt. Under section 29(5), where a right of action has accrued to recover "any debt or other liquidated pecuniary claim" and the person liable acknowledges the claim or makes any payment in respect of it, the right is treated as accruing on the date of that acknowledgment or payment. Section 30 sets the formalities: the acknowledgment must be in writing and signed by the person making it, and — section 30(2)(b) — the acknowledgment or payment must be made to the creditor or the creditor's agent. A debtor's internal reconciliation, however clearly it records the debt, is not an acknowledgment to you. Section 29(7) allows the period to be extended repeatedly, but a right once barred is not revived by a later acknowledgment or payment; and under section 29(6) a part payment of rent or interest does not extend time for the remainder of that rent or interest then due, although a payment of interest counts as a payment towards the principal.
That is a live issue on any ledger. A signed statement of account sent to you, a written payment plan, or a payment on account can restart the applicable period; equally, a debtor's adviser will look hard at whether an apparent acknowledgment was signed, by whom, and to whom it was sent. Note the limit: section 29(5) covers debts and liquidated claims, not a claim for unliquidated damages.
Fraud, deliberate concealment or mistake postpone the start. Under section 32, where the action is based on the defendant's fraud, where a fact relevant to the claim has been deliberately concealed by the defendant, or where the action is for relief from the consequences of a mistake, the period does not begin until the claimant discovers it or could with reasonable diligence have done so. Section 32(2) adds that deliberately committing a breach of duty in circumstances where it is unlikely to be discovered for some time is itself deliberate concealment.
One further point does not move the date but changes what an expired one means. Section 5 bars the remedy, not the right: limitation is a defence the defendant has to raise, and it does not extinguish the underlying obligation. That matters for set-off and for what a defendant can and cannot do with the debt.
None of this makes a limitation date safe to treat casually. It means that when one looks to have passed, the analysis is not finished.
Pre-action: find the right protocol first
Start by checking whether a specialist protocol applies. The published list of pre-action protocols includes ones for construction and engineering disputes and for professional negligence, and those apply to business-to-business disputes as much as any other. Paragraph 1.4 of the Pre-Action Protocol for Debt Claims expressly stands down where the debt is covered by another protocol. There is no protocol specific to a general commercial contract dispute — which is why the fallback below matters.
If none applies, which rules you are in depends on who the debtor is.
A business claiming a debt from an individual or a sole trader is in the Pre-Action Protocol for Debt Claims, which is prescriptive. Paragraph 1.1 says it "does not apply to business-to-business debts unless the debtor is a sole trader" — a limit that catches people out in both directions. Under it:
- The Letter of Claim must carry specified information and be accompanied by an Information Sheet, Reply Form and Financial Statement.
- If the debtor does not reply within 30 days of the date at the top of the letter, you may issue — subject, paragraph 3.4 says, to any remaining obligations under the protocol, which includes allowing for a reply posted close to the deadline.
- If they do reply, you must not issue for 30 days from receipt of the completed Reply Form, or 30 days from providing any documents requested, whichever is later (paragraph 4.2). If they say they are seeking debt advice, you must allow a reasonable period for it.
- A request for a document or information must be met, or its unavailability explained, within 30 days (paragraph 5.2).
- Where the debtor responded but there is no agreement, give at least 14 days' notice of an intention to issue (paragraph 8.2), unless there are exceptional circumstances requiring urgent action — the protocol's own example is a limitation period about to expire.
Everything else falls under the Practice Direction on Pre-Action Conduct and Protocols. Paragraph 6 sets the steps: a letter with concise details of the claim, the basis on which it is made, a summary of the facts, what you want and — if money — how the amount is calculated; a response "within a reasonable time — 14 days in a straightforward case and no more than 3 months in a very complex one"; and disclosure of key documents.
Paragraph 8 puts it plainly: "Litigation should be a last resort."
Ignoring an invitation to mediate has a price
Costs consequences for pre-action failures are not new — paragraphs 13 to 16 of the Practice Direction have long provided for them, and paragraph 14 has long treated it as non-compliance where a party "unreasonably refused to use a form of ADR, or failed to respond at all to an invitation to do so". Silence has always been capable of counting against you.
What changed is the court's power to compel. In Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416, decided on 29 November 2023, the Court of Appeal held that a court can lawfully stay proceedings and order the parties to engage in non-court dispute resolution, provided the order is proportionate and does not impair the right to a fair trial. From October 2024 that sits in the rules themselves: the Civil Procedure Rules now say the overriding objective includes "promoting or using alternative dispute resolution" (rule 1.1(2)(f)) and that active case management includes "ordering or encouraging the parties to use, and facilitating the use of, alternative dispute resolution" (rule 1.4(2)(e)). A court can direct parties to mediate, not merely press them to.
Paragraph 16 sets out what the court may order where there has been non-compliance. It is a discretion, exercised on the facts, not a tariff:
- that the party at fault pays the other side's costs, or part of them;
- that those costs be paid on the indemnity basis;
- that a winning claimant be deprived of interest for a period, or awarded it at a lower rate;
- that a losing defendant pay interest at a higher rate — not exceeding 10% above base rate.
Keep the ADR correspondence. If a reasonable proposal went unanswered, that is something to put in front of the judge on costs.
The track shapes what winning is worth
Allocation under CPR 26.9 starts with value but does not end there, and it is the court that allocates — you assess the likely track, you do not choose it. For ordinary money claims:
| Track | Normal value | And normally only if |
|---|---|---|
| Small claims | not more than £10,000 | — (r.26.9(4)) |
| Fast track | not more than £25,000 | trial likely to last no longer than one day, limited oral expert evidence (r.26.9(6)) |
| Intermediate track | not more than £100,000 | trial no longer than three days, oral expert evidence at trial limited to two experts per party, and one claimant against one or two defendants, or two claimants against one (r.26.9(7)) |
| Multi-track | everything else | — (r.26.9(12)) |
Read the third column. Value gets a claim into a track; the conditions decide whether it is the normal track for it. A £40,000 claim with three defendants and a four-day trial falls outside the normal intermediate track criteria however modest the sum, because rule 26.9(7)(d) is not met on the parties alone — though rule 26.9(9) lets the court allocate to the intermediate track anyway where it considers that in the interests of justice.
The track then shapes recovery. In the small claims track, CPR 27.14(2) limits the costs the court may order to a short list — the fixed costs of issuing, the court fees the winner paid, travel and limited loss of earnings for attending, a capped sum for an expert's fees, and a capped sum for legal advice where an injunction or specific performance was sought. Solicitors' fees for running the claim are not on that list, so a £6,000 claim is normally fought at your own expense whoever wins. The exception is rule 27.14(2)(g): a party who has behaved unreasonably can be ordered to pay further costs, assessed summarily — which is the small claims track's own reason to follow the pre-action steps and answer an ADR proposal. The fast and intermediate tracks normally run on fixed recoverable costs, capping what a winner recovers by stage and complexity band — subject to the exclusions in the rules and to the court's power to allow more in exceptional circumstances. Costs management and budgeting are the norm in the multi-track, again with exceptions.
Three different numbers are in play and they are easily confused: what your solicitor charges you, what the rules let you recover from the other side, and what the court will approve in a budget. The early question is not "will I win" but "what is winning worth once those three are reconciled".
What it costs to issue
The court fee to start a money claim, from the published table:
| Claim value | Issue fee |
|---|---|
| up to £300 | £35 |
| £300.01 – £500 | £50 |
| £500.01 – £1,000 | £70 |
| £1,000.01 – £1,500 | £80 |
| £1,500.01 – £3,000 | £115 |
| £3,000.01 – £5,000 | £205 |
| £5,000.01 – £10,000 | £455 |
| £10,000.01 – £200,000 | 5% of the claim |
| over £200,000 | £10,000 |
Four things to read off it.
The fee is calculated on the amount you are claiming plus any interest — gov.uk says so in terms. A £55,000 principal with £5,000 of accrued interest is a £60,000 claim for fee purposes, at £3,000.
The 5% band starts above £10,000. Below that the fee is the fixed figure for the band, and £455 is simply the fee for a claim between £5,000.01 and £10,000.
The maximum is £10,000, reached at a claim of £200,000. Above that the fee does not rise.
And if you leave the amount claimed blank, the fee is £10,000 — the maximum. An unquantified claim is charged as though it were the largest on the list, so estimate the figure and pay the band.
Those are real sums, and they belong in the early assessment of whether proportionate recovery justifies the full cost of proceeding. They are not a reason to plead a claim for less than it is worth. The fee is recoverable from the other side if you win; and while the statement of value on the claim form "does not limit the power of the court to give judgment for an amount which it finds the claimant is entitled to" (CPR 16.3(7)), a claim deliberately pitched low to save a fee invites an application to amend, the balance of the fee, and questions about the claimant's conduct.
Interest and compensation on unpaid commercial invoices
Where the debt is for goods or services between businesses, the Late Payment of Commercial Debts (Interest) Act 1998 gives a statutory entitlement that does not depend on a term in the contract.
When interest starts. It runs from the day after the relevant day: the agreed payment date, or the last day of the relevant 30-day period where none was agreed. That 30-day period does not run from the invoice — section 4(2H) starts it on the latest of the day your obligation was performed, the day the purchaser had notice of the amount, and, where there is an acceptance or verification procedure, the day after it is completed — which section 4(5C) treats as no later than 30 days after performance unless a longer period was expressly agreed and is not grossly unfair.
Where a long payment date was agreed, section 4(2E) can cap it: if the purchaser is not a public authority and the last day of the relevant 60-day period falls earlier than the agreed date, the relevant day is the last day of that 60-day period. But read section 4(2F) with it — that cap does not apply if the agreed payment day is not grossly unfair to the supplier. Whether a longer term is grossly unfair is a statutory test, not a question of whether it was negotiated: section 4(7A) requires all the circumstances to be considered, and in particular anything that is a gross deviation from good commercial practice and contrary to good faith and fair dealing, the nature of the goods or services, and whether the purchaser has any objective reason to depart from the 60 days. A 90-day term can pass that test or fail it on its facts.
The rate is the Bank of England base rate plus 8%. Article 4 of the Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002 sets it at 8% over the official dealing rate in force on 30 June, for interest that starts to run between 1 July and 31 December, or on 31 December, for interest that starts to run between 1 January and 30 June. Base rate stood at 3.75% on 30 June 2026, so interest that starts to run in the second half of 2026 does so at 11.75%.
Note what that means, because it is commonly got wrong. The rate attaches to when the interest started, not to each period it runs through — section 4(2) fixes it at the rate prevailing "at the end of the relevant day". A debt that fell due in August 2026 and is still unpaid in 2028 carries 11.75% throughout. Invoices whose interest starts in different half-years may carry different rates — the reference rate for both halves of 2026 happens to be 3.75%, but that is coincidence, not the rule — so a ledger has to be worked invoice by invoice.
Fixed compensation under section 5A is payable in addition to interest, and it attaches to each qualifying debt:
| Debt | Compensation |
|---|---|
| under £1,000 | £40 |
| £1,000 to under £10,000 | £70 |
| £10,000 or more | £100 |
Under section 5A(2A), where the reasonable costs of recovering the debt exceed the fixed sum, the supplier is entitled to the difference as well. On a ledger of small unpaid invoices, the per-invoice compensation adds up faster than the interest does.
Statutory interest cannot be claimed where the contract provides a substantial contractual remedy for late payment instead, so check the contract before pleading the Act.
A working order for the first fortnight
- Fix the limitation date: find the breach, check whether the contract is a deed, and check whether anything in sections 29 to 32 moves it. Diary the date.
- Assemble the contract as it actually stands — signed agreement, purchase orders, variations, the terms behind the invoice, and the emails that varied it in practice.
- Calculate the loss and be able to show the calculation. The Practice Direction requires it in the letter, and a figure you cannot build up is a figure the other side will not pay.
- Check for a specialist protocol, then send a compliant letter of claim on the right timetable.
- Assess the likely track and what recovery is worth after costs on it.
- Make a written ADR proposal and keep the correspondence.
- If limitation is close, take advice immediately. Protective proceedings and a stay may be the answer, but so may a properly drafted standstill agreement — and protective issue brings its own deadlines, including the four months allowed by CPR 7.5 for serving a claim form within the jurisdiction. A stay has to be granted; asking for one is not the same as having one. An arbitration clause or a contractual escalation procedure may also change the route entirely.
We run commercial contract disputes for businesses across England and Wales, from the letter before action to trial and enforcement — see civil and commercial litigation, or debt recovery where the claim is an unpaid invoice. Our debt recovery calculator gives an indicative figure for statutory interest, compensation and the court fee: it charges the fee on the sum plus the interest and compensation, and prices the compensation per invoice. It works the interest on the whole sum at the current rate, though, taking the invoices as roughly equal in size — so treat it as a first estimate, and a ledger of invoices that fell due in different half-years as a job for the invoice-by-invoice calculation above.
If a limitation date is near, contact us rather than working it through yourself.
This article is general information about the law in England and Wales. It is not advice on your situation, and limitation in any particular case depends on the facts and the contract.
