Everything You Need to Know About California Breach of Contract Laws
One or both parties can claim that there was a breach of contract, or a failure to perform in a manner that adheres to their mutual agreement or contract. Here’s everything you need to know about breach of contract laws in California.
The four essential elements of a breach of contract are 1) the existence of a contract, 2) the plaintiff’s performance of the contract or their excuse for non-performance, 3) the defendant’s breach of the contract, and 4) the resulting damage for the plaintiff.
What is a breach of contract?
One or both parties can claim that there was a breach or failure to observe their contract. A breach of contract is a failure on the behalf of one or both parties, without legal excuse, to perform any promise included in their contract, required by the standards of their industry, or any express or implied warranty (specific promises made by a seller to a buyer orally or in writing).
A judge can evaluate a claim for a breach of contract by addressing the following questions:
- Was there a contract in existence?
- If yes, what did the contract require of each party?
- Were there any modifications made to the contract at hand?
- Did the claimed breach of contract actually occur?
- If yes, how does the breach specifically relate to the contract?
- Does the defendant/breaching party have a legitimate legal defense to enforcement of the contract?
- If there is a breach, which damages were caused?
Related: Breach of Contract Statute of Limitations in California
Material Versus Minor Breach of Contract
Breaches of contracts can be either material or minor. The obligations of the parties/remedies for a breach of contract depend on which form of breach occurs.
A material breach results in the breaching party’s failure to perform some aspect of their contract with the other party. For example, if a contract requires a seller to send over three boxes of mascara bottles, and two boxes of eyeshadow are sent instead, this would be a material breach. Once a material breach occurs in this sense, the non-breaching party is no longer obligated to perform under the contract and instead has the right to receive any remedies that result from the courts’ ruling on the breach of contract.
A minor breach occurs when the non-breaching party still receives the product or service specified in the contract, even if there is a breach of contract on behalf of the other party involved. For example, unless a specific date is set, a reasonable delay on the delivery of this product or service can take place if the non-breaching party still receives their desired good/service. Under a minor breach, the non-breaching party is obligated to perform under the contract but may recover damages as a result of the breaching party’s error. For example, if the seller is responsible for a delay in the product’s delivery, the buyer is still obligated to pay for the item.
Related: Are Verbal Work Agreements Binding in California?
Damages for Breach of Contract
Per Civil Code 3289, any legal rate that was stipulated by a contract is chargeable even if there is a breach of that contract. A legal rate is the highest rate of interest that can legally be charged on any form of debt. This rate will stay in place, and therefore will need to be paid, until the contract is superseded by a verdict or a new obligation. Additionally, if the contract was entered after January 1, 1986, and does not stipulate a legal rate of interest, the obligation owed will accumulate an interest rate of 10% each year after the breach occurs. Within this context, it is important to note that the term “contract” is not a deed of trust (in a real estate transaction that can take the place of a mortgage) on real property, which is the land someone owns and the buildings and developments on their land.
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