Statute of Limitations for Contracts in California

If a plaintiff wishes to file a lawsuit stemming from a breach of contract, California law requires that the plaintiff files the suit within a specific period of time after the defendant’s alleged breach. In breach of contract cases, the first place the defendant’s attorney will look is to the state’s statute of limitations.

If the defendant can show that the statute of limitations has expired, the plaintiff shall be barred from filing a lawsuit. California’s laws specify statute of limitation periods for oral contracts and written contracts.

Breach of an Oral Contract

California Code of Civil Procedure Section 339 establishes a two-year statute of limitations for oral contracts. While this section applies to “oral contracts,” even most oral contracts include some type of written material; for example, a cancelled check, a receipt, or other proof that the parties had an oral contract.

Contracts in Writing

Under Section 337 of the California Code of Civil Procedure, the more generous statute of limitations for filing a lawsuit is four-years for written contracts. Section 339, however, establishes a two-year statute of limitations for certain written contracts pertaining to real estate titles and title insurance.

Tolling of California’s Statute of Limitations

In some cases, the statute of limitations can be suspended “tolled” for a specific period of time. In such cases, the statute of limitations will be paused, and shall begin running again.

To illustrate, under Section 351 of California’s Code of Civil Procedure, if a cause of action has accrued against an individual and he or she is out of state, the action may be put on hold until their return. In such cases, the defendant’s time of absence will not be a part of the time limited to file a lawsuit.

Additionally, Section 352(a) of the Code of Civil Procedure states that if a person has the right to bring an action, and at the time the cause of action accrued the defendant was a minor or lacked the legal capacity to make decisions, then the time that they were disabled would not be part of the time limited to begin a legal action against them.

It is important to note that contracting parties in California are allowed to include a term in their contract that shortens California’s statute of limitation period.

If a written contract provides a provision that shortens the statute of limitations and it is reasonable and valid, the shorter period should still provide plenty of time to pursue a judicial remedy in a breach of contract case.

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