Breach of Contract in California

OVERVIEW

Contracts govern countless real estate and business relationships in California, from purchase agreements and commercial leases to partnership agreements and service contracts. When one party fails to perform as promised, California law provides a range of remedies to enforce contractual rights or recover damages for breach.

At Vokshori Law Group, our Los Angeles breach of contract attorneys represent property owners, businesses, and individuals in contract disputes throughout California, including real estate transactions, commercial agreements, and complex business relationships.

What Is a Breach of Contract Under California Law?

Breach of contract occurs when a party fails to perform a material obligation required by a valid contract. Under California law, a plaintiff generally must prove four elements:

  • The existence of a valid contract
  • Plaintiff’s performance or excuse for nonperformance
  • Defendant’s breach
  • Resulting damages

See CDF Firefighters v. Maldonado (2008) 158 Cal.App.4th 1226, 1239.

A contract may be written, oral, or implied by conduct, provided the essential elements of contract formation are present, including mutual assent and consideration. See Civil Code § 1550.

Common Breach of Contract Disputes in Real Estate and Business Matters

Breach of contract claims arise frequently in both real estate and commercial contexts.

Real estate contract disputes often involve:

  • Purchase and sale agreements
  • Seller disclosure obligations
  • Broker and listing agreements
  • Commercial leases and lease guarantees
  • Construction and development contracts

Business and commercial disputes commonly include:

  • Partnership or operating agreements
  • Vendor and service contracts
  • Loan agreements and promissory notes
  • Employment and independent contractor agreements
  • In many cases, the dispute centers not on whether a contract exists, but on whether the alleged breach was material and whether damages can be proven with reasonable certainty.

Types of Breach: Material, Minor, and Anticipatory

Not every failure to perform constitutes a material breach.

  • Material breach: A failure that defeats the essential purpose of the contract and excuses further performance by the non-breaching party
  • Minor breach: A partial or technical breach that may give rise to damages but does not excuse performance
  • Anticipatory breach: A clear and unequivocal refusal to perform before performance is due

California courts recognize anticipatory breach where one party repudiates the contract in advance. See Taylor v. Johnston (1975) 15 Cal.3d 130, 137.

Damages for Breach of Contract in California

Damages are the primary remedy for breach of contract under California law. The goal is to place the non-breaching party in the position they would have occupied had the contract been performed.

Expectation and General Damages

Civil Code § 3300 provides that damages are measured by the amount that will compensate the aggrieved party “for all the detriment proximate caused” by the breach, or that would likely result in the ordinary course of events. These damages often include:
  • Lost profits
  • Out-of-pocket costs
  • Contract price differentials

Consequential and Special Damages

Consequential damages may be recovered if they were reasonably foreseeable at the time the contract was formed. See Hadley v. Baxendale principles as applied in California contract law.>

Limitations on Damages

California law prohibits recovery of speculative damages. Damages must be proven with reasonable certainty, even if exact calculation is not possible. See Sargon Enterprises, Inc. v. Univ. of Southern California(2012) 55 Cal.4th 747.

Specific Performance and Equitable Remedies

Although damages are favored, specific performance may be available when monetary compensation is inadequate, particularly in real estate contracts.

Civil Code § 3387 creates a presumption that breach of an agreement to convey real property cannot be adequately relieved by monetary damages alone, making specific performance a common remedy in real estate disputes.

Courts may also grant injunctive relief or declaratory relief where appropriate, depending on the nature of the contract and breach.

Defenses Commonly Raised in Breach of Contract Actions

Defendants often challenge breach of contract claims by asserting defenses such as:
  • No enforceable contract existed
  • Plaintiff failed to perform conditions precedent
  • The breach was not material
  • Waiver or modification
  • Impossibility or impracticability
  • Statute of limitations

Early analysis of these defenses is critical, particularly where demurrers or dispositive motions are anticipated.

Statute of Limitations for Breach of Contract in California

The statute of limitations depends on the type of contract:
  • Written contracts: 4 years (Code Civ. Proc. § 337)
  • Oral contracts: 2 years (Code Civ. Proc. § 339

The limitations period generally begins to run at the time of breach, not discovery, though exceptions may apply in certain circumstances.

Procedural Considerations in Contract Litigation

Breach of contract claims are frequently attacked at the pleading stage. Courts scrutinize whether the complaint adequately alleges:
  • The contract’s essential terms
  • The specific conduct constituting breach
  • A causal connection between breach and damages
Attaching or pleading the contract with sufficient specificity is often critical to surviving a demurrer. In real estate matters, breach of contract claims are commonly paired with causes of action for fraud, negligent misrepresentation, or specific performance, depending on the facts.

Example: A Common Breach of Contract Scenario

A buyer and seller enter into a written agreement for the purchase of commercial real property. The buyer deposits earnest money, conducts inspections, and removes contingencies. Before closing, the seller refuses to proceed with the sale after receiving a higher offer from a third party. Despite the seller’s refusal, the contract contains no contingency allowing termination at that stage. The buyer files a breach of contract action seeking damages for lost benefit of the bargain and, alternatively, specific performance of the purchase agreement.

In this situation, the court’s analysis focuses on the contract’s express terms, whether the buyer satisfied all conditions precedent, and the seller’s failure to perform. If breach is established, the buyer may recover damages under Civil Code § 3300 or pursue specific performance under Civil Code § 3387, depending on the adequacy of monetary relief.

This type of dispute illustrates how breach of contract claims in California often turn less on broad legal theories and more on contract language, timing, and proof of damages.

Frequently Asked Questions About Breach of Contract in California

1. What counts as a breach of contract?

A breach occurs when a party fails to perform a required contractual obligation without legal excuse.

2. Can I sue for breach if the other party partially performed?

Yes, but the court will evaluate whether the breach was material and what damages, if any, resulted.

3. Do I need a written contract to sue?

No. Oral and implied contracts may be enforceable, though written contracts are easier to prove.

4. Can I recover attorney’s fees in a breach of contract case in California?

Attorney’s fees are not automatically recoverable in breach of contract actions. Under California law, each party generally bears its own attorney’s fees unless a statute or the contract itself provides otherwise.

The most common basis for recovering attorney’s fees in contract litigation is a contractual attorney’s fee provision.

5. How do contractual attorney’s fee clauses work?

If a contract includes an attorney’s fee provision, California Civil Code § 1717 makes that provision reciprocal. This means that even if the contract appears to grant attorney’s fees to only one party, the prevailing party may recover reasonable attorney’s fees regardless of which side the clause favors.

Courts focus on the language of the contract and the nature of the claims actually litigated when determining fee entitlement.

6. What does “prevailing party” mean?

The “prevailing party” is not always the party who wins every issue. California courts take a practical approach and evaluate which party achieved its main litigation objectives.

In some cases, neither side is deemed the prevailing party, particularly where results are mixed or the litigation ends in a compromise resolution.

7. Can attorney’s fees exceed the amount of damages?

Yes. In many breach of contract cases, attorney’s fees can exceed the underlying damages, especially where disputes involve complex contracts, prolonged discovery, or motion practice.

This reality often drives settlement strategy and early case evaluation, particularly when a fee-shifting provision is involved.

8. Can I recover attorney’s fees if the contract is found unenforceable?

Possibly. Under Civil Code § 1717, a party may still recover attorney’s fees if the action was “on the contract,” even if the court ultimately finds the contract unenforceable, depending on the circumstances and the basis for the ruling.

This issue is highly fact-specific and frequently litigated.

9. Are attorney’s fees recoverable for related tort claims?

Attorney’s fees may be recoverable for tort claims that are inextricably intertwined with contract claims, where the same facts and legal work are required to litigate both. Courts analyze whether the claims are so intertwined that separating attorney time would be impracticable.

How Vokshori Law Group Can Help

Breach of contract disputes often involve more than a simple failure to perform. They frequently require careful analysis of contract language, performance history, damages evidence, and procedural strategy.

At Vokshori Law Group, our Los Angeles contract litigation attorneys represent clients in real estate and business contract disputes throughout California, from pre-litigation enforcement through trial. If you are dealing with a contract dispute, early legal guidance can significantly affect the outcome.

Call us at (855) 855-2608 or visit www.VokLaw.com to learn more.

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