Contractual Statute of Limitation

In Skaan v. Federal Express Corp, an opinion filed by the Court of Appeals of Tennessee at Jackson on December 13, 2012, the Court examined a contractual limitation provision in an employment contract. The plaintiff filed a workers’ compensation claim and was eventually discharged from his employment. Eight months after being termination, he filed a lawsuit for retaliatory discharge. The defendant moved to dismiss the lawsuit by summary judgment based upon the following language found in the employment agreement:

“To the extent the law allows an employee to bring legal action against Federal Express Corporation, I agree to bring that complaint within the time prescribed by law or 6 months from the date of the event forming the basis of my lawsuit, whichever expires first.”

In Tennessee, there is a “strong public policy in favor of upholding contracts. . . . absent fraud or duress, the law generally holds parties responsible for what they sign.” The Court then ruled that a determination of whether the contract was enforceable was a question of law; and thus, an appropriate determination for summary judgment.

In Tennessee, parties may contract for a limitation period shorter than the period prescribed by law; though it must be reasonable. The Court held that the contractual limitation period was enforceable, and thus, the plaintiff’s claim was dismissed. The Court cited Morgan v. Town of Tellico Plains, 2002 WL 31429084 (Tenn.Ct.App. Oct. 30, 2002)(upholding a 60 day contractual limitation period) as support for the holding.