2021 New Mexico Statutes
Chapter 55 - Uniform Commercial Code
Article 2 - Sales
Section 55-2-725 - Statute of limitations in contracts for sale.

Universal Citation: NM Stat § 55-2-725 (2021)

(1) An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued. By the original agreement the parties may reduce the period of limitation to not less than one year but may not extend it.

(2) A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance, the cause of action accrues when the breach is or should have been discovered.

(3) Where an action commenced within the time limited by Subsection (1) is so terminated as to leave available a remedy by another action for the same breach, such other action may be commenced after the expiration of the time limited and within six months after the termination of the first action unless the termination resulted from voluntary discontinuance or from dismissal for failure or neglect to prosecute.

(4) This section does not alter the law on tolling of the statute of limitations nor does it apply to causes of action which have accrued before this act [this chapter] becomes effective.

History: 1953 Comp., § 50A-2-725, enacted by Laws 1961, ch. 96, § 2-725.



UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

Prior uniform statutory provision. — None.

Purposes. — To introduce a uniform statute of limitations for sales contracts, thus eliminating the jurisdictional variations and providing needed relief for concerns doing business on a nationwide scale whose contracts have heretofore been governed by several different periods of limitation depending upon the state in which the transaction occurred. This article takes sales contracts out of the general laws limiting the time for commencing contractual actions and selects a four year period as the most appropriate to modern business practice. This is within the normal commercial record keeping period.

Subsection (1) permits the parties to reduce the period of limitation. The minimum period is set at one year. The parties may not, however, extend the statutory period.

Subsection (2), providing that the cause of action accrues when the breach occurs, states an exception where the warranty extends to future performance.

Subsection (3) states the saving provision included in many state statutes and permits an additional short period for bringing new actions, where suits begun within the four year period have been terminated so as to leave a remedy still available for the same breach.

Subsection (4) makes it clear that this article does not purport to alter or modify in any respect the law on tolling of the statute of limitations as it now prevails in the various jurisdictions.

"Action". Section 1-201.

"Aggrieved party". Section 1-201.

"Agreement". Section 1-201.

"Contract for sale". Section 2-106.

"Goods". Section 2-105.

"Party". Section 1-201.

"Remedy". Section 1-201.

"Term". Section 1-201.

"Termination". Section 2-106.

The United States is not bound by state statutes of limitation or subject to the defense of laches in enforcing its rights. United States v. Bunker Livestock Comm'n, Inc., 437 F. Supp. 1079 (D.N.M. 1977).

Three-year statute of limitation does not apply to causes of action lying in contract. — The three-year limitation period under 37-1-8 NMSA 1978 does not apply to actions lying in contract. The four-year limitation period under the Uniform Commercial Code, 55-2-725 NMSA 1978, applies to actions for breach of warranty where a party seeks to recover damages for personal injuries. Badilla v. Wal-Mart Stores East, Inc., 2015-NMSC-029, rev'g 2013-NMCA-058, 302 P.3d 747.

The nature of the claim, not the essence of injury, governs which statute of limitation applies. — Where plaintiff, who worked as a tree trimmer, purchased work boots from defendant that purported to meet acceptable occupational safety and health administration standards, and after wearing the boots for several months, a piece of rubber on the sole of the boots became unglued, and while at work cutting down dead tree limbs, the unglued piece of the sole of the boots got caught on debris, causing plaintiff to fall, drop a log on himself, and injure his back, plaintiff claimed that defendant made express and implied warranties about the work boots, that the work boots were not as warranted, that defendant breached a contract for sale of goods, and that plaintiff has the right to recover any damages resulting from defendant's breach of that warranty. The nature of the right plaintiff's claims asserted was the right to receive consequential damages as compensation for defendant's alleged failure to provide plaintiff with boots that conformed with the warranties defendant allegedly made; the nature of plaintiff's claims lie in contract rather than in tort, and therefore plaintiff's cause of action is governed by the four-year statute of limitations under 55-2-725 NMSA 1978 of the Uniform Commercial Code, not the three-year statute of limitation set forth in 37-1-8 NMSA 1978. Badilla v. Wal-Mart Stores East, Inc., 2015-NMSC-029, rev'g 2013-NMCA-058, 302 P.3d 747.

Essence of action is controlling. — Where plaintiff, who worked as a tree trimmer, purchased a pair of work boots from defendant, plaintiff wore the boots at work for several months; as the boots wore down, a piece of rubber because unglued and rolled up as plaintiff walked, making it dangerous when working; plaintiff tripped while lifting a large log and was injured; plaintiff was unaware of any defects that made the boots unsafe; and plaintiff sued defendant for breach of warranties seeking to recover damages for plaintiff's injuries, not to recover the cost of boots, the three-year statute of limitation of Section 37-1-8 NMSA 1978, not the four-year statute of limitation of Section 55-2-72 NMSA 1978, applied because plaintiff's personal injury was the basis for the breach of warranty suit. Badilla v. Wal-Mart Stores East, Inc., 2013-NMCA-058, 302 P.3d 747, cert. granted, 2013-NMCERT-005.

Action to recover on deficiency after default. — This section governs an action to recover a deficiency after a default on a motor vehicle installment contract; thus, the statute of limitations is four years. First Nat'l Bank v. Chase, 1994-NMSC-127, 118 N.M. 783, 887 P.2d 1250.

Revival provisions of 37-1-16 NMSA 1978 are inapplicable to limitations periods set by the Uniform Commercial Code. — In consolidated appeals, where plaintiff filed actions to recover deficiencies in motor vehicle installment contracts following the repossession and sale of the vehicles subject to the installment contracts, and where plaintiff filed each lawsuit more than four years after each defendant breached its installment contract, but where plaintiff argued that its complaints were timely because, pursuant to § 37-1-16 NMSA 1978, defendants' partial payments made after the initial breach tolled the four-year statute of limitations set forth in this section, the New Mexico court of appeals held that the complaints were untimely because an action to recover a deficiency on a motor vehicle installment contract is governed by Article 2 of the Uniform Commercial Code (UCC) and subject to the four-year statute of limitations set forth in § 55-2-725, and § 37-1-17 NMSA 1978 renders the tolling provisions of § 37-1-16 inapplicable to limitations periods set by the UCC. Autovest v. Agosto, 2021-NMCA-053, cert. granted.

Sale of beverages for on-premises consumption. — Since the warranty of merchantable goods provisions of 55-2-314 NMSA 1978 specifically apply to the sale of beverages to be consumed on the premises, this section governs claims arising from such sales; the limitation period for on-premises beverage sales is four years. Fernandez v. Char-Li-Jon, Inc., 1994-NMCA-130, 119 N.M. 25, 888 P.2d 471, cert. denied, 119 N.M. 20, 888 P.2d 466.

Warranty claims barred by four-year statute of limitations. — Where plaintiff brought a products liability action against the designers and manufacturers of a polyester textile mesh designed for small ventral hernia repair, alleging negligence, strict liability, and breaches of express and implied warranties arising from operations to repair a hernia, and where defendants moved to dismiss plaintiff's claims, arguing that applicable statutes of limitations bar each claim, the district court granted defendants' motion, holding that plaintiff's physician used the defendants' defective product to repair her hernia on October 27, 2010, but plaintiff did not file her original complaint until October 5, 2017, almost three years after the expiration of the four-year statute of limitations that governs express and implied warranty claims, and that plaintiff was aware of cognizable tort injuries between April 2011, and March 2014, but did not file her original complaint until October 5, 2017, after the three-year statute of limitations governing negligence and strict liability claims had expired. Nowell v. Medtronic Inc., 372 F. Supp.3d 1166 (D. N.M. 2019).

Law reviews. — For comment, "Commercial Law - Uniform Commercial Code - Sale of Goods," see 8 Nat. Resources J. 176 (1968).

For annual survey of commercial law in New Mexico, see 18 N.M.L. Rev. 313 (1988).

For annual survey of New Mexico law of products liability, 19 N.M.L. Rev. 743 (1990).

Am. Jur. 2d, A.L.R. and C.J.S. references. — 63A Am. Jur. 2d Products Liability § 909 et seq.

What statute of limitations governs action arising out of transaction consummated by use of credit card, 2 A.L.R.4th 677.

Application, to security aspects of sales contract, of UCC § 2-725 limiting time for bringing actions for breach of sales contract, 16 A.L.R.4th 1335.

What statute of limitations applies to actions for personal injuries based on breach of implied warranty under UCC provisions governing sales (UCC § 2-725(1)), 20 A.L.R.4th 915.

Computer sales and leases: time when cause of action for failure of performance accrues, 90 A.L.R.4th 298.

Causes of action governed by limitations period in UCC § 2-725, 49 A.L.R.5th 1.

What constitutes warranty explicitly extending to "future performance" for purposes of UCC § 2-725(2), 81 A.L.R.5th 483.

54 C.J.S. Limitation of Actions § 61; 77A C.J.S. Sales §§ 327, 377.

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