A statute is an act of legislation, and a "statute of limitations" typically prevents courts from dealing with claims arising from matters that happened years ago (subject to some exceptions). The public policy arguments are usually that witness memories decay to the point of obvious unreliability, and that the maxim "equity aids the vigilant not those who sleep on their rights" was already the root of the common law doctrine of laches, but scattered over so much case law that putting the concept on a statutory footing is useful for the courts and all litigants (and especially defendants).

(In criminal law, "justice delayed is justice denied" and clarifications of constitutional or treaty requirements for speedy trials also can be tidied up by the legislature in a statute of limitations).

Statute (legislation) is a superior source of law to contract law, and so there is generally no way to contract to avoid being statute barred if a claim for breach of contract (or specific performance, etc.) is made beyond the statutory deadline.

Typically there are carve outs enacted in a statute of limitations that allow a claim to be brought out-of-time if the defendant has acted in a dishonest way that prevented a claim from being filed in time, for certain classes of litigant, or for certain types of claim. (And in criminal law, for certain offences - serious crimes will tend to have a longer, or no, limit on how long after the crime the prosecution is begun).

A statute of limitations typically does not extinguish defences based on the lapse of too much time; but such defences in some jurisdictions may be contracted away, leaving the statutory limit as the hard deadline.