California Breach of Contract Lawsuit: Examples, Penalties, & Legal Help

A contract is an agreement in which the parties to it promise to exchange respective performances of value to them. Contracts may be written or oral, express or implied.

Breach a contract in California when a party fails to perform as promised in their agreement with the other party or parties. A party to a contract who breaches it may be liable for breach of contract.

For instance, in one of the simplest of contracts, one person may promise to pay another for a product, e.g., a used car. If the buyer gives the seller of the car a check that their bank does not honor because there are not sufficient funds in the buyer’s bank account, the buyer has breached their contract with the seller. The party who has not breached the contract may then sue the party who has breached it.

What Should I Do if My Contract Has Been Breached?

A good first step would be to talk to a California lawyer. The first thing a lawyer would do is to review the contract to ensure that a court would view it as a valid contract. They would then address the issue of whether the other party’s conduct constituted a breach of the contract. The next issue to address would then be the damages that resulted from the breach.

If an individual experienced a minor breach of contract that did not really harm the non-breaching party, their lawyer might advise them that a lawsuit is not advisable.

Generally, the party to a contract that has been breached by the other party wants to send a demand letter to the breaching party and attempt to negotiate a resolution of their dispute. For example, in the car transaction above, the seller wants to contact the buyer and ask them if they plan to cure their breach. The seller might demand a cash payment within a certain amount of time. If the buyer cannot agree to that, the seller might demand the return of the car.

The non-breaching party would only consider filing a lawsuit for breach of contract after attempting to negotiate a resolution of the breach.

How Do I Sue for a Breach of Contract in California?

The first step would be to have a legal consultation in California. A lawyer can advise an individual as to which court would be the one in which they would file their breach of contract lawsuit. A lawyer can also provide an individual with additional information regarding how to file a breach of contract lawsuit.

An individual can sue for breach of contract damages of up to $10,000 in a California small claims court. Businesses and other entities can sue for up to $5,000. If an individual seeks damages of more than $10,000, or an entity more than $5,000, they would file their lawsuit in a California superior court. There is one in each county in California.

What Are the Penalties for Breach of Contract in California?

The goal of a breach of contract lawsuit is to put the non-breaching party in the position in which they would have been if the other party to the contract had not breach it. California law provides that damages awarded in a breach of contract case should be an amount of money that fully compensates the non-breaching party for all the harm to them that was directly caused by the breach. General damages are awarded for this purpose.

California allows the awarding of special damages as well. Special damages, which are sometimes referred to as “incidental damages,” compensate for harm that may have been caused by some special circumstances surrounding the claimed breach of the contract.

For example, if a non-breaching party incurred expenses in anticipation of the breaching party performing as promised in the contract, these might be compensated by special damages.

For instance, a party may have rented warehouse space to store a product they purchased in a contractual transaction. If the product was never delivered, the party would claim that they should be compensated for the rent they paid for the warehouse space.

In order to recover special damages, the breaching party must have been aware of the special circumstances at the time they entered into the contract.

Some contracts provide for liquidated damages. “Liquidated damages” are an amount of money specified in the contract that the breaching party should pay the non-breaching party in the event of a breach. A court will enforce a liquidated damages provision in a valid contract unless the breaching party can show that it would for some reason be unconscionable.

Restitution is another remedy for breach of contract.

Another possible remedy that a non-breaching party may seek in a breach of contract lawsuit is specific performance. An award of specific performance would require the breaching party to do what they promised in the contract. It is a common remedy in lawsuits about real estate transactions. A specific parcel of real property is viewed by the law as unique, so to make the non-breaching party whole, the breaching party would have to complete the transaction and transfer title to the property to the non-breaching party.

California law does not allow punitive damages for breach of contract, unless the breach occurs in connection with an intentional tort.

What Are Some Defenses for Breach of Contract?

There are many possible defenses to claims of breach of contract as follows:

• Legal Incapacity: A party may argue they lacked the legal capacity to enter into a contract because they are not 18 years old, have mental disabilities, or were coerced while under the influence of alcohol or controlled substances.
• Statute of Limitations: Every state has statutes of limitations, which are laws that set deadlines for bringing a lawsuit. If the person who wants to sue misses the legal deadline, they are barred from bringing a lawsuit. In some cases, the party accused of breaching a contract can point out the deadline for a lawsuit has passed.
• Statute of Frauds: Some contracts must be in written form. The statute of frauds is a law specifying the kinds of contracts that must be in writing. For example, contracts for real estate transactions must be in writing. Contracts that would take more than a year to complete must be in writing and signed by all parties involved. Oral contracts for these types of transactions are not valid. A party who is alleged to have breached a contract that should be in writing but is not may claim that it is not valid because of the statute of frauds.
• Mutual Mistake: This occurs when both parties are mistaken about the contract’s essential terms. The breaching party can claim this mutual mistake as their reason for failing to deliver their promised performance.
• Lack of Consideration: Every contract must involve one party exchanging a thing of value for another party’s providing them with a thing of value. In legal terminology, the thing of value is referred to as “consideration.” If the parties do not exchange consideration, there is no valid contract. Instead, the transaction might be viewed as a gift, where one party gives something of value to another person while receiving nothing in return.
• Impossibility, Impracticability, or Frustration of Purpose: Generally, a breaching party would use these defenses when they were unable to perform as promised because of circumstances beyond their control. They would claim that they would have performed but they were prevented by a situation that made it impossible or impracticable to do so.
• Estoppel: The breaching party might claim that the other party verbally agreed to accept some minor deviation in performance of a written contract, e.g., a short delay in the delivery of products. The breaching party might claim that they acted in good faith based on reliance on this agreement. The non-breaching party is prohibited by the doctrine of estoppel from claiming that the breaching party breached the contract.
• Duress: The breaching party may claim that any contract is not valid, because they were coerced into making the contract and did not enter into it of their own free will. For this reason, the contract is not valid.
• Fraudulent Inducement: The breaching party may claim that any contract is not valid because they were induced to enter into the contract by fraudulent misrepresentation, coercion, or undue influence.
• Illegality: If the contract concerns a transaction that is illegal, a court will not enforce it. The breaching party could argue that the contract concerned a translation that is illegal.
• Unconscionability: If a contract involves a party who had unfair bargaining power in the transaction or one party used other unfair or manipulative practices, a court may view it as unconscionable and unenforceable.

Do I Need a Lawyer for a Breach of Contract?

If you are a party to a contract and have been harmed by the other party’s failure to perform as promised, you want to consult a California contract lawyer.

LegalMatch.com can review your contract and advise you of the best way to get the remedy you need for breach.

A California contract lawyer can also draft contracts and review contracts presented to you by other parties for your agreement.