June 18, 2024

When it comes to contract law in California, understanding the legal landscape is critical. This article will guide you through the complexities of breach of contract claims, the notion of unjust enrichment, and the duties that bind parties involved in a contract. 

By examining on-point cases in California, you’ll gain a wealth of knowledge that may prove invaluable if you ever find yourself in a breach of contract situation.

What Constitutes Breach of Contract in California?

A contract breach occurs when one party in a contract neglects to fulfill their responsibilities or obligations as stipulated in the agreement. For instance, if you entered into a contract to buy a car from a dealership but did not supply you with the car as agreed, this would likely be considered a breach of contract.

To sue for breach of contract in California, the plaintiff (the party filing the lawsuit) must be able to prove the following essential elements:

  • A valid contract existed between the plaintiff and the defendant
  • The plaintiff performed their obligations under the contract
  • The defendant breached the contract
  • The plaintiff incurred losses or damages due to the breach.

If you can substantiate these four components, you can establish a valid claim for breach of contract per California law. Let’s look at each element in more detail.

Was There a Valid Contract?

To sue for breach of contract, there must have been a valid, enforceable contract between the parties. Under California contract law, an enforceable contract requires the following elements:

  • Mutual assent – a “meeting of the minds” where both parties agree to the terms
  • Consideration – something of value offered by each party, such as money, property, services, etc.
  • Capacity – The parties involved must have the legal capacity to contract.
  • Lawful object – The contract’s purpose must be within the bounds of the law.

Evidence of a valid contract can include a written agreement signed by both parties, correspondence or emails showing the agreement, or even evidence of an oral agreement. However, certain types of contracts must be in writing under California’s fraud statute.

Did the Plaintiff Perform Their Obligations?

To succeed on a claim for breach of contract, the plaintiff must show that they performed their end of the bargain under the contract terms. For example, if the plaintiff agreed to pay a deposit and sign paperwork to purchase a car, they would need evidence showing they paid the deposit and signed the necessary documents.

If the plaintiff failed to meet one or more of their contractual obligations, the defendant may argue the plaintiff breached the contract first, absolving the defendant of liability. This is known as the first breach rule.

Did the Defendant Breach the Contract?

Next, the plaintiff must be able to prove the defendant breached the terms of the contract. Common breaches of contract include:

  • Neglecting to provide the agreed-upon goods or services as pledged.
  • Neglecting to remunerate for goods or services that have been provided.
  • Failing to complete work on time.
  • Providing defective work or products.
  • Violating a non-compete or confidentiality clause.

The plaintiff will need evidence that clearly demonstrates how the defendant’s actions or inactions constituted a material breach of the terms of the agreement. Minor technical breaches may not always justify a lawsuit.

Did the Breach Cause Damages?

Finally, to recover compensation, the plaintiff must prove they incurred tangible financial losses or damages due to the defendant’s breach. Common damages in breach of contract cases can include:

  • Loss of expected profits
  • Costs to remediate defective work
  • Fees paid for services not received
  • Costs to secure replacement goods/services

Without provable damages, there is no cause of action for breach of contract in California. Plaintiffs can also seek consequential damages if the breach caused additional costs beyond just the value of the contract itself.

What is the Statute of Limitations for a Breach of Contract Case?

If you want to sue for breach of contract in California, it’s important to act quickly. The statute of limitations for written contracts in California is four years from the date of the breach, as outlined in the California Code of Civil Procedure §337. For oral contracts, the statute of limitations is only two years from the date of breach under §339.

Neglecting to initiate a lawsuit within the relevant statute of limitations timeframe will preclude you from pursuing damages for the breach, underscoring the importance of promptly taking legal action. A knowledgeable contract lawyer, like those at Tong Law, can help you determine the relevant statute of limitations and deadlines for your particular breach of contract case.

What Damages Can I Recover in a California Breach of Contract Case?

In most cases, the primary goal of a California breach of contract lawsuit is to put the plaintiff in the position they would have been had the contract been properly performed. 

Common damages awarded in breach of contract cases can include:

  • Compensatory damages to reimburse financial losses tied directly to the breach
  • Consequential damages resulting from the breach
  • Pre-judgment interest on losses incurred
  • Attorney’s fees and court costs, if allowed under the contract

In certain instances, the court may also grant punitive damages as a means to penalize the defendant for their deliberate, malevolent, or fraudulent breaches. But punitive damages are only awarded in extreme cases of deliberate wrongdoing.

Can I Sue for Both Breach of Contract and Fraud?

Sometimes, a breach of contract claim is accompanied by fraudulent activity. For example, a contractor might make false representations about their skills to induce you to sign a remodeling contract and then fail to deliver the agreed-upon work.

In cases like these, it may be possible to file claims for both breach of contract and fraud or negligent misrepresentation based on the same core facts. An experienced litigation attorney can help determine if you have grounds for multiple causes of action.

How Do You Prove a Valid Contract Exists in California?

Proving a valid, enforceable contract is essential to prevail in a breach of contract claim. Under California law, either oral or written contracts can be enforceable. Nonetheless, specific categories of contracts must be documented in writing to adhere to the statute of fraud. These include:

  • Real estate purchase contracts
  • Contracts that cannot be completed within one year
  • Contracts for the sale of goods above $500

For oral contracts, you must provide evidence like testimony, documentation, or course of conduct showing mutual agreement on terms. Written contracts are easier to validate than signed documents.

What Defenses Can Be Raised Against Breach of Contract Claims?

There are several legal defenses available to defendants in California contract breach cases. Common defenses include:

  • No valid contract was formed – The defendant can argue no enforceable contract existed due to lack of offer and acceptance, insufficient consideration, or other deficiencies.
  • Plaintiff breached first – As discussed above, if the plaintiff failed to perform their obligations under the contract, the defendant is relieved of liability per the first breach rule.
  • Performance was impossible – Impossibility defenses argue the defendant could not perform due to death, unexpected weather, destruction of necessary property, etc.
  • Plaintiff failed to mitigate damages – Plaintiffs have a duty to take reasonable steps to minimize losses resulting from a breach. Failing to mitigate can reduce recoverable damages.

An experienced contract law attorney can assess any defenses raised and build strong counterarguments on your behalf.

How to File a Breach of Contract Lawsuit in California: Step-by-Step

Follow these key steps if you need to sue someone for breaching a contract in California:

  1. Send breach of contract notice. Give written notice explaining how the defendant breached and allowing them to rectify it.
  2. Try alternative dispute resolution. Mediation or arbitration can resolve many contract disputes more quickly and affordably.
  3. Consult an attorney. An experienced contract attorney can evaluate your case and provide strategic advice.
  4. File your complaint. Your complaint initiates the lawsuit and sets out your allegations. Make sure to document your damages.
  5. Serve the defendant. Officially notify the defendant of the lawsuit by serving them with court papers.
  6. Litigate your claim. During litigation, evidence is gathered, and legal arguments are made before trial. Most cases settle beforehand.
  7. Attend trial or mediation. If no settlement is reached, the court or jury will decide the outcome at trial. Mediation is an alternative.
  8. Enforce the judgment. If you win damages, collect through appropriate legal means if they aren’t paid voluntarily.

Seeking guidance from a business law attorney can assist you in comprehending your rights and determining whether initiating a breach of contract lawsuit in California is the most suitable legal recourse for your situation. 

With proper evidence and arguments, you may be able to recover compensation for contract breaches. An attorney at Tong Law in Oakland can assess your case and contract, construct a claim grounded in the facts and legal principles, and vigorously pursue a favorable resolution through either settlement negotiations or trial proceedings.