A business owner comes in with a strong claim. The facts are clear, the documents support it, the other side behaved badly, and the damages are real. Then someone asks when the underlying events happened, and the conversation changes.

Limitations is unlike almost every other issue in a business dispute. Most legal problems have degrees: a weak argument can still be worth something, a difficult claim can still settle. A missed limitations deadline is generally binary. The claim is gone, no matter how strong it was, no matter how badly the other side behaved, and no matter how sympathetic the facts.

That is why it belongs at the front of every case evaluation rather than somewhere in the middle. It is also why it is worth understanding before you have a dispute, because the single most common reason a Maryland business misses a deadline is not that the deadline was short. It is that nobody realized the clock had already started.

This guide covers the general three-year rule, the twelve-year exception and the widespread misunderstanding about it, how Maryland decides when a claim accrues, the different rule for sales of goods, deadlines by claim type, what stops the clock, how your own contract can shorten it, and what filing actually requires. It is a companion to our broader guide on Maryland business litigation.

Md. Code, Cts. and Jud. Proc. Section 5-101 provides that a civil action at law shall be filed within three years from the date it accrues unless another provision of the Code provides a different period.

That is the backbone. Absent a more specific statute, three years from accrual is the rule, and it governs the large majority of business claims, including:

• Breach of an ordinary written contract not under seal
• Breach of an oral or implied contract
• Breach of fiduciary duty
• Fraud and negligent misrepresentation
• Tortious interference with contract or business relationships
• Conversion
• Unjust enrichment and quantum meruit
• Most statutory business claims that do not specify their own period

Notice the structure of the statute: the three-year period is a default that yields to any other provision setting a different time. So the analysis is always two steps. First, is there a specific statute for this claim? Second, if not, three years applies, and the question becomes when it accrued.

Almost everyone knows the number is usually three. Far fewer know when the three years begin, and that is where real cases are won and lost.

The discovery rule

Maryland once followed a strict rule that limitations ran from the date of the wrong regardless of whether the plaintiff knew about it. That changed. In Poffenberger v. Risser, 290 Md. 631 (1981), the Court of Appeals held that a cause of action accrues when the claimant in fact knew or reasonably should have known of the wrong.

Maryland’s appellate courts have since made clear that the discovery rule, though originally adopted as an exception, now functions as the general rule, and that it applies to actions governed by the three-year statute. See Frederick Road Limited Partnership v. Brown & Sturm, 360 Md. 76 (2000).

Two halves of that standard both matter:

• Actual knowledge starts the clock. If you knew, the period runs.
• Constructive knowledge also starts it. If you reasonably should have known, through the exercise of ordinary diligence, the clock runs whether or not you actually knew.

Accrual in a straightforward breach case

Where the injury is immediately apparent, accrual is generally the date of the breach. Maryland courts have declined to stretch the discovery rule to claims where the harm was obvious when it occurred. An invoice that went unpaid on a known due date is not a discovery-rule case.

Continuing conduct

Where wrongful conduct continues over time, whether each act restarts the clock or the whole course of conduct is treated as a single claim depends on the nature of the claim. Some statutes answer the question expressly. The Maryland Uniform Trade Secrets Act, for example, treats a continuing misappropriation as a single claim, which means the clock does not restart with each new use. Do not assume ongoing conduct keeps the deadline perpetually open.

Section 5-102 provides that an action on a specialty shall be filed within twelve years after the cause of action accrues, or within twelve years from the date of the death of the last to die of the principal debtor or creditor, whichever is sooner.

The statute lists what counts:

1. Promissory note or other instrument under seal
2. Bond, except a public officer’s bond
3. Judgment
4. Recognizance
5. Contract under seal
6. Any other specialty

What makes a contract “under seal”

Whether a document qualifies is a question of construction rather than the presence of a particular word, and Maryland courts have addressed it repeatedly. Common indicators include the word “seal” or “(SEAL)” appearing next to the signature, a recital in the body that the parties are signing under seal, or a corporate seal affixed. But the analysis looks at whether the parties intended the instrument to be a sealed one, so neither the presence nor absence of a single formality is automatically decisive.

Two further wrinkles in the statute itself:

• Payment affects the limitations calculation. Under subsection (b), a payment of principal or interest on a specialty suspends the operation of Section 5-102 as to that specialty for three years after the date of payment.
• Residential mortgage carve-out. The statute contains an exception addressing a deed of trust, mortgage, or promissory note signed under seal that secures or is secured by owner-occupied residential property as defined in the Real Property Article.

If your claim is for breach of a contract for the sale of goods, the general three-year rule ordinarily does not govern that contract claim. Md. Code, Com. Law Section 2-725, Maryland’s version of the Uniform Commercial Code provision, generally controls an action for breach of a contract for sale. Separate tort, statutory, or other claims arising from the same transaction may be governed by different limitations periods.

Its key features:

• Four years. An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued.
• The parties can shorten it, but not lengthen it. By the original agreement the parties may reduce the period of limitation to not less than one year, but may not extend it.
• Accrual does not depend on knowledge. A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. This is a significant departure from the discovery rule that governs most other Maryland claims.
• Warranty timing. A breach of warranty occurs when tender of delivery is made, except where a warranty explicitly extends to future performance of the goods and discovery of the breach must await that performance, in which case accrual occurs when the breach is or should have been discovered.
• A saving provision. Where a timely action is terminated in a way that leaves a remedy available by another action for the same breach, that other action may be commenced within six months after termination of the first, unless the termination resulted from voluntary discontinuance or dismissal for failure to prosecute.

This table is a starting point for orientation, not a substitute for analysis. Multiple periods can apply to the same facts depending on how a claim is characterized, and several entries have conditions that the table cannot capture.

Several of these claims are covered in depth elsewhere on this site: breach of contract, breach of fiduciary duty, trade secret misappropriation, the Maryland Wage Payment and Collection Law, and collecting an unpaid invoice.

Fraudulent concealment

Section 5-203 addresses the situation where a party is kept in ignorance of a cause of action by the fraud of the adverse party. In that circumstance, the cause of action is treated as accruing at the time the party discovered, or by the exercise of ordinary diligence should have discovered, the fraud.

This is genuinely useful where a defendant took affirmative steps to hide the wrong, and Maryland courts have applied it to toll periods otherwise applicable to common law tort and contract claims where affirmative fraudulent conduct prevented discovery through due diligence. But note the limit built into the provision: the ordinary diligence requirement means concealment does not protect a plaintiff who ignored what was in front of them.

Other statutory rules affecting limitations

• Minority and mental incompetency. Under Section 5-201, when a covered cause of action accrues in favor of a person who is then a minor or mentally incompetent, that person generally must file within the lesser of three years or the otherwise applicable limitations period after the disability is removed. The section does not apply if more than three years remain when the disability is removed, and imprisonment, absence from Maryland, and marriage are not disabilities that extend limitations.
• Dismissed insolvency proceeding. Section 5-202 provides that, when a debtor files a petition in insolvency that is later dismissed, the period between filing and dismissal is excluded when determining whether a claim against the debtor is barred.
• Certain unregistered foreign entities. Section 5-204 prevents a foreign corporation or foreign limited partnership required to qualify or register in Maryland, and persons claiming under it, from benefiting from a limitations defense in specified actions arising from business conducted without the required qualification or registration. Section 5-204 is not a general rule tolling limitations whenever a defendant is absent from Maryland.

The statutory period is not always the operative deadline. Commercial agreements frequently contain provisions that cut it down, and those provisions can be enforceable.

• Contractual limitations clauses. Many commercial contracts include a term requiring any claim to be brought within a specified period, often one or two years, shorter than the statute would allow.
• The UCC’s express authorization. For sales of goods, Section 2-725 expressly permits the parties, by their original agreement, to reduce the period to not less than one year, while prohibiting any extension.
• Notice and cure provisions. These impose their own deadlines that can run long before the statutory one, and failing to give required notice can bar a claim independently of limitations.
• Claim procedures in construction, franchise, and insurance contexts. These frequently contain short internal deadlines for asserting claims.

The lesson is simple and repeatable: read the agreement before relying on the statute. Our guides on letters of intent, earnout disputes, and franchise agreement review each discuss internal deadlines of this kind that operate independently of the general statute.

A statute of limitations runs from accrual. A statute of repose runs from a fixed event regardless of accrual, which means it can extinguish a claim before the claimant ever knew there was one. The discovery rule does not rescue a claim barred by repose, because repose is not measured from discovery at all.

The Maryland provision most relevant to construction and commercial-property disputes is Section 5-108. Subject to its statutory exceptions, subsection (a) prevents a covered cause of action from accruing when wrongful death, personal injury, or injury to real or personal property resulting from the defective and unsafe condition of an improvement occurs more than twenty years after the entire improvement first became available for its intended use. Subsection (b) establishes a ten-year repose period for covered claims against an architect, professional engineer, or contractor. If a covered cause of action accrues within the applicable repose period, subsection (c) requires the action to be filed within three years. The statute does not apply when the defendant was in actual possession and control of the property as owner, tenant, or otherwise when the injury occurred, and it does not broadly govern every claim involving construction or an improvement to real property.

Maryland treats the filing of the complaint with the appropriate court as the act that satisfies the statute. Maryland Rule 2-101 governs commencement of civil actions in the circuit courts, and Rule 3-101 governs District Court civil actions.

Three consequences follow that matter in practice:

• Service can come later. Serving the defendant after the period expires does not defeat a timely filing, though service still has its own deadlines and a failure to serve properly causes real problems.
• A demand letter does not stop the clock. Sending a demand, however forceful, has no effect on limitations. Neither does the other side’s acknowledgment of the debt, absent circumstances that independently restart the period.
• Filing in the wrong court is a risk. Where a filing is made in a court that lacks jurisdiction, the protection a timely filing would otherwise provide can be compromised. The forum question is covered in our business litigation guide.

1. Build the date timeline first. When did the conduct occur, when did you first notice something was wrong, when did you first ask questions, when did you receive documents, and when did you understand the harm? Accrual analysis lives in those dates.
2. Identify every possible claim, because different claims on the same facts can carry different periods. A single course of conduct might support a contract claim at three years, a sale-of-goods claim at four, and a claim on a sealed instrument at twelve.
3. Pull the governing documents and check for a seal, a contractual limitations clause, a notice and cure requirement, and an arbitration provision.
4. Do not wait for certainty. The discovery rule turns on when you should have known, not on when you became sure. Investigating for another six months to be confident can consume the remaining window.
5. Consider a tolling agreement if productive negotiations are underway and the deadline is near.
6. Get counsel involved immediately where the two-year mark has passed. Even where a claim looks stale, tolling, concealment, a longer period, or an alternative theory may be available, and that analysis takes time to do properly.
7. If in doubt, protect the date. Filing preserves the claim and preserves your options. An expired claim cannot be revived by a better argument later.

• Assuming every written contract gets twelve years. Section 5-102 covers instruments and contracts under seal, not written agreements generally.
• Measuring from when you understood the problem rather than from when a reasonably diligent person would have been on notice.
• Applying the three-year rule to a sale of goods. Section 2-725 gives four years and accrues regardless of knowledge.
• Believing settlement talks pause the clock. They generally do not. Use a written tolling agreement.
• Never reading the contract’s own limitations clause, which may cut the period to a year or less.
• Treating a demand letter as protective. Only filing stops the clock.
• Overlooking the one-year defamation period. It is far shorter than the default and easy to miss.
• Assuming ongoing conduct keeps the deadline open indefinitely. Some statutes treat a continuing course of conduct as a single claim.
• Forgetting that counterclaims have their own deadlines.
• Waiting to be certain. The most common reason good Maryland claims expire.

For most business claims, three years from the date the claim accrues. Md. Code, Cts. and Jud. Proc. Section 5-101 provides that a civil action at law shall be filed within three years from the date it accrues, unless another provision of the Code provides a different period. That default governs breach of an ordinary contract, breach of fiduciary duty, fraud, tortious interference, conversion, and unjust enrichment, among others. But the default yields to any more specific statute, and several important business claims have their own periods. A contract or instrument under seal carries twelve years, a sale of goods carries four, and defamation carries one. The right first question is therefore not how long, but which period applies to this particular claim and when it started running.

When the claim accrues, and Maryland determines that using the discovery rule. Under Poffenberger v. Risser, 290 Md. 631 (1981), a cause of action accrues when the claimant in fact knew or reasonably should have known of the wrong. Maryland’s appellate courts have since treated the discovery rule as the general rule rather than an exception for claims governed by the three-year statute. Both halves matter. Actual knowledge starts the clock, and so does constructive knowledge, meaning what a reasonably diligent person in your position would have known. That second half is where businesses get caught: the period often begins when you first had reason to investigate, not when you finally understood the full extent of the harm. Where the injury was immediately apparent, accrual is generally the date of the breach.

No, and this is one of the most common and costly misunderstandings in this area. Section 5-102 provides a twelve-year period for specialties, and the statute lists what qualifies: a promissory note or other instrument under seal, a bond other than a public officer’s bond, a judgment, a recognizance, a contract under seal, or any other specialty. The operative concept is the seal, not the writing. An ordinary signed written contract without a seal is governed by the three-year period in Section 5-101, exactly as an oral agreement would be. You will find sources stating that the twelve-year period covers written contracts generally; that is incorrect, and relying on it can cost a claim, because a business that believes it has twelve years when it has three may not discover the error until the deadline has passed.

Whether an instrument qualifies is a question of construction rather than the mechanical presence of a particular word, and Maryland courts have addressed it repeatedly. Common indicators include the word “seal” or “(SEAL)” appearing beside the signature, a recital in the body of the document stating that the parties are executing it under seal, or a corporate seal affixed to the instrument. Courts look to whether the parties intended the document to be a sealed instrument, so neither the presence nor the absence of any single formality is automatically decisive. Two additional features of Section 5-102 are worth knowing: a payment of principal or interest on a specialty suspends the operation of the section as to that specialty for three years from the date of payment, and the statute contains an exception addressing certain instruments signed under seal that secure owner-occupied residential property.

A different statute applies. Md. Code, Com. Law Section 2-725 provides that an action for breach of any contract for sale must be commenced within four years after the cause of action has accrued. Two features distinguish it sharply from the general rule. First, the parties may by their original agreement reduce the period to not less than one year, but may not extend it, so a supply agreement can validly shorten your window. Second, and more consequentially, a cause of action accrues when the breach occurs regardless of the aggrieved party’s lack of knowledge of the breach. The discovery rule that protects many Maryland plaintiffs generally does not apply. A breach of warranty occurs at tender of delivery, except where a warranty explicitly extends to future performance and discovery must await that performance.

Generally no, and assuming otherwise is a recurring and avoidable way to lose a claim. Ongoing settlement discussions do not toll limitations. Neither does the other side’s promise to make things right, your internal investigation, waiting for an accountant to finish an analysis, the counterparty’s financial difficulty, or a decision to preserve the business relationship a while longer. The clock runs through all of it unless a recognized statutory or equitable tolling basis applies. Where negotiations are genuinely productive and a deadline is approaching, the reliable solution is a written tolling agreement in which the parties agree that the limitations period is suspended for a defined time. It is a short document, it is routinely used in commercial disputes, and it removes the pressure to file suit purely to protect the date.

It can, within limits. Section 5-203 addresses the situation where a party is kept in ignorance of a cause of action by the fraud of the adverse party, and provides that the cause of action is treated as accruing at the time the party discovered, or by the exercise of ordinary diligence should have discovered, the fraud. Maryland courts have applied that provision to toll the periods otherwise applicable to common law tort and contract claims where affirmative fraudulent conduct prevented the plaintiff from discovering the claim through due diligence. The ordinary diligence requirement is the limit: concealment does not rescue a plaintiff who disregarded obvious warning signs. Note also that some statutory causes of action have been held not subject to the judicially created discovery rule, so the availability of tolling depends on the specific claim.

A statute of limitations runs from accrual, meaning from when the claim arose or was discovered under the rule applicable to that claim. A statute of repose instead measures time from a specified event and can prevent a cause of action from accruing even before the claimant discovers the injury. Maryland’s Section 5-108 applies to specified claims involving wrongful death, personal injury, or injury to real or personal property resulting from the defective and unsafe condition of an improvement to real property. Subject to statutory exceptions, it generally establishes a twenty-year repose period, with a ten-year period for covered claims against architects, professional engineers, and contractors. A covered claim that accrues within the repose period must generally be filed within three years. The statute does not apply when the defendant was in actual possession and control of the property when the injury occurred, and claims seeking only economic loss may fall outside its enumerated categories of injury.

No. Only filing the action with the appropriate court satisfies the statute. Maryland Rule 2-101 governs commencement of civil actions in the circuit courts and Rule 3-101 governs District Court civil actions, and in each the filing is the operative act. A demand letter, however forceful, has no effect on limitations, and neither does the other side’s acknowledgment of the claim absent circumstances that independently restart the period. One related point works in a plaintiff’s favor: because filing rather than service is what counts, serving the defendant after the period has expired does not defeat an otherwise timely filing, though service carries its own deadlines and defective service creates real problems. Filing in a court that lacks jurisdiction, however, can compromise the protection a timely filing would otherwise provide.

Move now and get counsel involved rather than continuing to investigate. Build a timeline of the relevant dates, including when the conduct occurred, when you first noticed something was wrong, when you asked questions, and when you received documents, because accrual analysis turns on those dates. Identify every claim the facts might support, since different claims carry different periods. Pull the governing documents and check for a seal, a contractual limitations clause, and any notice and cure requirement. Do not wait for certainty, because the discovery rule turns on when you should have known rather than when you became sure. If negotiations are productive, consider a tolling agreement. And if the deadline is imminent, filing protectively preserves the claim and your options, while an expired claim generally cannot be revived by a better argument later.