A statute of limitations is an enactment in a common law legal system that sets forth the maximum time after an event that legal proceedings based on that event may be initiated. In civil law systems, similar provisions are usually part of the civil code or criminal code and are often known collectively as "periods of prescription" or "prescriptive periods."
Common law legal system might have a statute, for example, limiting the time for prosecution of crimes designated as misdemeanors to two years after the offense occurred. Under such a statute, if a person is discovered to have committed a misdemeanor three years ago, the time has expired for the prosecution of the misdemeanor. While on one hand it may seem unfair to forbid prosecution of crimes that law enforcement can now prove to the standard required by law (cf., e.g., Beyond a reasonable doubt, Clear and convincing evidence, and Preponderance of the evidence), the purpose of a statute of limitations or its equivalent is to ensure that the possibility of punishment for an act committed sufficiently long ago cannot give rise to either a person's incarceration or the criminal justice system's activation. In short, unless the crime is exceptionally heinous in nature, social justice as enacted through law has compromised that lesser crimes from long ago are best let be rather than distract attention from contemporary serious crimes.
There is a statute of limitations for a few reasons. One is that over time evidence of all sorts can be corrupted or disappear. Memories fade, crime scenes are changed, and companies get rid of records. So, the best time to bring a lawsuit is while the evidence is not lost and as close to the alleged egregious behavior as possible. Another reason is that people want to get on with their lives and not have legal battles from their past come up unexpectedly. The injured party has a responsibility to quickly bring their charges so that the process can begin.
Note, however, that limitations periods may begin when the cause of action is deemed to have arisen, or when a plaintiff had reason to know of the harm, rather than at the time of the original event. This distinction is significant in cases in which an earlier event causes a later harm (e.g., a surgeon negligently operates on a patient, who subsequently suffers the consequences of that negligence years later).
In a related concept, contracts may also have a term under which they may be the basis of a suit, and after which a plaintiff is held to have waived any right to claim. Under Article VI of the United States Constitution, private contracts cannot be abridged; this provision has been held by the United States Supreme Court to mean that the federal government or a State can only vitiate a contract if it directly opposes an important public policy. Similarly, the Charter of Fundamental Rights, codified into law applicable to European Union countries by the passage civil lawsuit) is said to have accrued when the event beginning its time limitation occurs. Sometimes this is the event itself that is the subject of the suit or prosecution (such as a crime or personal injury), but it may also be an event such as the discovery of a condition one wishes to redress, such as discovering a defect in a manufactured good, or in the case of controversial "repressed memory" cases where someone discovers memories of childhood sexual abuse long afterwards.
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