How to handle breach of contract in California

Contracts protect business interests and lower the company’s risk when entering partnerships, hiring employees or otherwise conducting major transactions. As such, a breach of contract can represent a major financial loss.

Learn more about proving a breach of contract in California when a partner, supplier or contractor fails to meet the terms of an agreement.

Elements of breach of contract

The plaintiff in this type of case must prove that a valid contract existed. They must also show that they performed the contract and the defendant failed to do so. Finally, the plaintiff must show that financial damages resulted directly from this breach of contract. For example, if a chef at a restaurant breached a non-compete agreement and opened a cafe across the street, the plaintiff can attempt to prove that this location caused their business to decline.

Available damages and remedies

California does not allow punitive damages in a breach of contract case. The plaintiff can seek compensation for the business’s actual financial loss. Coverage for legal fees is available only when the company made this provision in the original contract. In lieu of monetary damages, the plaintiff can ask the court to require the defendant to perform the terms of the contract as agreed.

Businesses do not necessarily have to go to court to protect their interests in a contract breach. Alternative dispute resolution methods such as mediation can help companies reach an agreement with former partners or employees.

Companies that do decide to sue have four years to do so in California for a written contract. The statute of limitation for breach of an oral contract is just two years.

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