In 2002, when I was doing my undergraduate degree, our contract law teacher started talking about period of limitation and its effect. I neither had a concept nor an argument about period of limitation under art 1845 of the civil code. I attended the whole class, tried to understand arguments, justifications and ration d’être of the period of limitation. Mulugeta Mengist, in his monograph says that period of limitation is used to ensure certainty and predictability in transactions.
Now, with some years of working experience and exposure, I feel like I have understood what period of limitation in a private contractual relationship. To restate what Mulugeta wrote unless there is a time limit after the lapse of which the right cannot be enforced, people do not feel secure to do whatever they like with respect to their property.
A limitation period is the period of time within which a party to a contract must bring a claim. Limitation period starts counting when the contract is breached, or when the damage is suffered. Period of limitation is a period of time, the expiry of which extinguishes parties’ legal remedies and also parties’ legal right. This is an absolute defense beneficial to the debtor but the burden of proof of the statute of limitation is with the debtor.
However, one court decision still perplexes me: Development Bank of Ethiopia v. Mr. Tigabu Teferra, Cassation No 78444/2005, found in vol 14. In order to give a glimpse of the case, the respondent, Mr Tigabu, borrowed money from the bank against collateral, in which the immovable property was registered in Megabit 23, 1989 E.C. After 14 years, it renewed the registration of the immovable property in the local registrar office, Merab Wolega Registration Office. The respondent argued that the renewal of the registration is against article 3058(2) of the civil code. On the other hand, the bank said that it had already given notice based on article 3 of proclamation 97/90.
At last, the cassation decided that art 3058(1) & (2) are not concerned with period of limitation but lapse of mortgage. Citing a precedent, Cassation Decision 44800/2002, Vol 10, it concluded that