Phone: 619-432-5145
Phone: 619-432-5145
December 03, 2021
Statute of limitations (“SOL”) for a breach of contract claim mandates that a breach of contract lawsuit must be filed within a certain time limit. The statute of limitations varies by jurisdiction and varies by which cause of action is being filed. In order to determine which statute of limitations is applicable in a breach of contract claim, first you must assess what type of contract has been formed, and secondly, you must determine when the contract was breached.
The first step in a breach of contract claim is determining what type of contract was formed. There are numerous types of contract, however this blog focuses on three types on contracts, specifically an Expressed Written Contract, Expressed Oral Contract and Implied Contract. Each of these contracts and the applicable statute of limitations are discussed below.
The second step in the breach of contract claim is determining when the breach occurred. A breach of contract occurs whenever an obligation or duty contemplated in the contract is not honored per the terms of the parties’ agreement. A breach of contract can be minor, or a breach can be material to the agreement. Depending on the situation a minor breach of contract claim can include a delay in services provided, a delay in payment or a slight deviation in production. Alternatively, a material breach can include a complete failure to perform the services contemplated in the contract or failure to deliver negotiated products.
It is important to identify the date of the contract breach, because, “[a] contract cause of action does not accrue until the contract has been breached.” (Spear v. Cal. State Automobile Assn. (1992) 2 Cal.4th 1035, 1042 [9 Cal.Rptr.2d 381, 831 P.2d 821].)
In our previous blogs discussing statute of limitations, we looked at the statute of limitations from a fraud and “breach of fiduciary duty SOL” perspective. Comparing the differences between constructive fraud and breach of fiduciary duty, we identified the different elements for each claim and their respective statute of limitation periods. We touched on the issue of statute of limitations as it relates to these two causes of action, however, in a breach of contract claim, there is often a crossover cause of action for fraud and breach of fiduciary duty when there in intentional bad behavior giving rise to the breach. Let’s take a closer look at the SOL as it relates to a cause of action for breach of a written contract; breach of an oral contract and breach of an implied contract.
A written contract is an expressed agreement between two or more parties in which duties, obligations, benefits and other key and material terms to the contract, has been outlined in writing and most often executed by the parties. The expectations of the parties, for the most part, has been set out in a written agreement.
For a written contract, under the California Code of Civil Procedure section 337(a), must be filed within four years of the breach.
SOL for Breach of Written Contract: California Code of Civil Procedure section 337(a) “The Time of Commencing Actions Other Than for the Recovery of Real Property 337. Within four years: (a) An action upon any contract, obligation or liability founded upon an instrument in writing …”
An oral contract is an expressed agreement between two or more parties; and an oral contract has the same enforceability as a written agreement. In an oral contract two or more parties have discussed and agreed to what is expected of all parties, the rights of each party, and other material terms to the transaction. The expectations of the parties for the most part has been discussed and agreed to.
For an oral contract, California Code of Civil Procedure section 339(1) states, that the statute of limitations, or otherwise the time to file a lawsuit for breach of an oral contract is two years.
SOL for Breach of Oral Contract: California Code of Civil Procedure section 339(1) “The Time of Commencing Actions Other Than for the Recovery of Real Property 339. Within two years: 1. An action upon a contract, obligation or liability not founded upon an instrument of writing …”
Implied contracts, unlike oral contracts, are formed by the conduct of the parties. In other words, the parties have not discussed and agreed to the terms of the contract directly; however, the behavior of the parties has created an unspoken agreement, that is enforceable. In this instance, the behavior of the parties’ evidence an intent to enter into an agreement, and based on such behavior a contract is implied. An implied contract is enforceable even in the absence of a written or oral agreement. Implied contracts are generally no less legally binding than express oral contracts.
CACI No. 305. Implied-in-Fact Contract: “Express and implied-in-fact contracts have the same legal effect, but differ in how they are proved at trial: “‘Contracts may be express or implied. These terms, however, do not denote different kinds of contracts, but have reference to the evidence by which the agreement between the parties is shown. If the agreement is shown by the direct words of the parties, spoken or written, the contract is said to be an express one. But if such agreement can only be shown by the acts and conduct of the parties, interpreted in the light of the subject-matter and of the surrounding circumstances, then the contract is an implied one.’” (Marvin v. Marvin (1976) 18 Cal.3d 660, 678, fn. 16 [134 Cal.Rptr. 815,557 P.2d 106], I.)”
For an implied contract, California Code of Civil Procedure section 339(1) states, that the statute of limitations, or otherwise the time to file a lawsuit for breach of an implied-in-fact contract is two years.
SOL for Breach of Implied Contract: California Code of Civil Procedure section 339(1) “The Time of Commencing Actions Other Than for the Recovery of Real Property 339. Within two years: 1. An action upon a contract, obligation or liability not founded upon an instrument of writing …”
| Cause of Action | Statute of Limitations [SOL] | |
| Breach of Written Contract | A written contract is an expressed agreement between two or more parties in which duties, obligations, benefits and other key and material terms to the contract, has been outlined in writing and most often executed by the parties. | 4
four-year statute of limitation for breach of a written contract |
| Breach of Oral Contract | In an oral contract two or more parties have discussed and agreed to what is expected of all parties, the rights of each party, and other material terms to the transaction. | 2
two-year statute of limitation for breach of an oral contract |
| Breach of Implied-In-Fact Contract | Implied contracts are formed by the conduct of the parties. The behavior of the parties has created an unspoken agreement, that is enforceable. | 2
two-year statute of limitation for breach of an Implied-In-Fact contract |