Claim against Trondheim municipality after a property purchase is time-barred

In 2010, Trondheim municipality sold a development property in Trondheim to Entra Eiendom AS. In the purchase contract, the municipality guaranteed to cover the cleanup costs resulting from potential soil contamination. According to the contract, the guarantee obligation had no expiration date. During the development of the property from 2018, contamination was discovered in the soil, resulting in additional costs of approximately NOK 13 million for Entra. Entra demanded the amount be covered by the municipality.

The question before the Supreme Court was whether Entra's claim was time-barred. If the guarantee given by Trondheim municipality is covered by section 3 (4) of the Limitation Act, no part of Entra's claim is time-barred.

The Supreme Court concluded that the municipality's guarantee is not covered by section 3 (4) of the Limitation Act, because it was not clearly stated in the purchase contract when or how the guarantee period expired. Instead, the applicable provision is section 3 (2), and Entra's claim is therefore time-barred.

A unanimous Supreme Court found that section 3 (4) of the Limitation Act only applies to guarantees that have an expiration date. Unlimited guarantees are not covered. A majority of three justices further stated that to be covered by section 3 (4) of the Limitation Act, it must be clearly stated in the contract when or how the guarantee period expires, and this requirement was not met in this case.

The minority of two justices held that although section 3 (4) of the Limitation Act is based on the assumption that the guarantee has an expiration, this does not provide a basis for establishing a clarity requirement. They believed it was clear from the guarantee when it expired, and that no part of Entra's claim was time-barred.

The judgment provides guidance on the interpretation of section 3 (4) of the Limitation Act regarding contractual guarantees.

Read the judgment from the Supreme Court (Norwegian only) (PDF)

Area of law: Limitation

Key paragraphs: 43–47, 53

Justices: Bull, Arntzen, Østensen Berglund, Hellerslia, Lund