When two parties enter into a contract in California, they create a legal agreement that outlines the terms and obligations each party needs to fulfill.
However, what happens if one party fails to uphold their end of the bargain?
What is a statute of limitations?
A statute of limitations is a law that sets the maximum amount of time after an event within which one party may begin legal proceedings against another. It is like a deadline for filing a lawsuit. A judge could dismiss and bar further action on a claim that one party files outside the statute of limitations.
Statute of limitations on breach of contract claims
In California, the statute of limitations for breach of contract claims is generally four years. Therefore, if one party believes the other has breached the contract, they have up to four years from the date of the breach to file a lawsuit seeking damages.
Exceptions to the rule
While the four-year limit is the general rule, there are some exceptions that could either extend or shorten this time frame. For example, contracts involving the sale of goods under the Uniform Commercial Code may have a different statute of limitations. Additionally, contracts with government entities may have shorter filing time frames.
Discovery rule
In some cases, the clock for the statute of limitations does not start ticking until one party discovers or should have discovered the contract breach. This is the discovery rule. For instance, if one party hides the breach or it is not immediately obvious, the statute of limitations may start from the time the party discovered or should have discovered the breach through reasonable diligence.
By understanding these limitations, parties can protect their interests and seek remedies in a timely manner.