The limitation period (délai de prescription / Verjährungsfrist) under the Swiss Code of Obligations (CO) defines the time within which a creditor must assert a claim or lose the right to enforce it. The Swiss CO 2020 reform significantly updated prescription rules: the general limitation period is now 10 years (formerly also 10 years for most claims but 5 years for periodic claims). Specific shorter periods apply in practice: 3 years for tort claims and unjust enrichment (a major change from the prior 1-year period), 3 years for contractual warranty claims, and 5 years for periodic payments (rent, interest, dividends).

In an M&A context, limitation periods are critical for warranty and indemnity claims under the SPA. The SPA will typically specify contractual limitation periods that are shorter than the statutory ones — commonly 18 months to 3 years for general representations and warranties, and up to 7 years for tax warranties and fundamental warranties. The buyer's claim for breach of warranty must be notified (and litigation initiated) within these contractual periods; failure to do so bars the claim entirely.

The limitation period also affects the structure of warranty and indemnity insurance (W&I insurance) and warranty retention mechanisms (escrow, holdback). For cross-border transactions between France and Switzerland, the applicable law (French or Swiss) determines which limitation period applies, and this choice of law is one of the most practically important decisions in the SPA negotiation.

At Hectelion, we advise on limitation period implications in our M&A advisory mandates and coordinate with legal counsel on warranty claim management.