California law guide covering material breach, non-disparagement violations, settlement clawbacks, damages calculations, and ready-to-use demand letter templates.
A breach of contract occurs when one party to a valid agreement fails to perform their obligations without legal excuse. In California, breach of contract is governed by the California Civil Code sections 1619 through 1633, which define what constitutes a valid contract and the duties arising from it. Whether you are dealing with a broken business agreement, a violated settlement term, or a non-disparagement clause violation, understanding the legal framework is the first step toward recovery.
To prevail on a breach of contract claim in California, the plaintiff must establish all four of the following elements. Failure to prove any one element will defeat the claim.
There must be a legally enforceable agreement between the parties. This can be written, oral, or implied by conduct. The contract must have offer, acceptance, consideration, and legal capacity. Under CC §1622, all contracts may be oral except those required to be in writing by the statute of frauds (CC §1624).
The plaintiff must demonstrate that they performed their own obligations under the contract, or that they were excused from performing. Common excuses include the other party's prior breach, impossibility of performance, or waiver. Partial performance may suffice if the breach was anticipatory.
The defendant must have failed to perform a contractual obligation without legal justification. The breach can be total (failure to perform entirely), partial (deficient performance), or anticipatory (clear indication of intent not to perform). The nature of the breach determines the available remedies.
The plaintiff must prove they suffered actual harm as a result of the breach. Damages must be certain, not speculative, and must flow naturally from the breach or be reasonably foreseeable at the time of contracting. Nominal damages may be available even without provable financial loss.
California law recognizes several categories of breach, each with different legal consequences and available remedies.
A material breach is a substantial failure that goes to the heart of the agreement, defeating the very purpose of the contract. When a material breach occurs, the non-breaching party is excused from further performance and may immediately sue for damages. Courts consider the extent of harm, adequacy of compensation, likelihood of cure, and whether the breach was willful. Example: A contractor abandons a construction project midway through, or a vendor delivers goods fundamentally different from those specified.
A minor breach involves a deviation from the contract terms that does not defeat the overall purpose of the agreement. The non-breaching party must continue to perform but can recover damages for the deficiency. Example: A vendor delivers goods one day late when time was not expressly of the essence, or a service provider completes work with minor cosmetic defects. The aggrieved party may deduct damages but cannot walk away from the contract.
Anticipatory breach (also called anticipatory repudiation) occurs when one party clearly communicates—through words or conduct—that they will not perform their future contractual obligations before performance is due. Under California law, the non-breaching party may treat the contract as immediately breached and pursue damages without waiting for the performance date. This doctrine prevents parties from stringing along the other party while planning non-performance.
An actual breach occurs at the time performance is due when one party fails to perform, refuses to perform, or performs deficiently. This is the most common type of breach and is what most people envision when they hear "breach of contract." The non-breaching party must typically provide notice of the breach and an opportunity to cure (if the contract requires it) before pursuing legal action. The remedies depend on whether the actual breach is material or minor.
The timing of a breach matters critically for statute of limitations purposes. In California, a breach occurs at the moment the breaching party fails to perform or repudiates the contract. For continuing obligations (such as ongoing non-disparagement covenants), each violation may constitute a separate breach, potentially restarting the limitations period.
Always send a demand letter as soon as you discover a breach. A well-crafted demand letter establishes a record of notice, may satisfy contractual cure provisions, and preserves your right to recover attorney fees if the contract includes an attorney fees clause under CC §1717.
Non-disparagement clauses have become one of the most frequently litigated breach of contract issues in California, particularly as online reviews and social media posts can cause immediate, widespread reputational harm. When a party signs an agreement containing a non-disparagement provision and then posts negative content online, the resulting breach can trigger significant financial consequences.
A non-disparagement clause is a contractual provision in which one or both parties agree not to make negative, critical, or derogatory statements about the other party, their business, products, services, officers, or employees. These clauses are commonly found in:
The most common non-disparagement breach today involves posting negative reviews on online platforms after signing an agreement. Platforms where violations frequently occur include:
Under most non-disparagement clauses, any statement that could tend to harm the reputation, diminish the goodwill, or reflect negatively on the other party constitutes a violation. This includes:
When a party breaches a non-disparagement clause, the aggrieved party has several powerful remedies available under California law:
If the non-disparagement clause was part of a settlement agreement, the breaching party may be required to return some or all of the settlement payment. Many well-drafted agreements include specific clawback provisions stating that breach of the non-disparagement clause renders the settlement voidable and requires repayment. Even without an explicit clawback provision, the court may order restitution or rescission of the settlement agreement based on the material breach.
Courts can issue injunctions ordering the breaching party to remove the offending review or post, cease making further disparaging statements, and take down content from all platforms. Preliminary injunctions are available when the injured party can demonstrate a likelihood of prevailing on the merits and irreparable harm. Because reputational damage from online reviews is ongoing and compounds over time, courts frequently find the irreparable harm requirement satisfied.
Beyond the clawback of settlement funds, the aggrieved party may recover compensatory damages for provable harm caused by the disparaging statements, including lost business, diminished goodwill, and costs of reputation repair. If the contract contains a liquidated damages clause for non-disparagement violations, that amount is recoverable provided it represents a reasonable estimate of anticipated harm.
If the underlying agreement contains an attorney fees provision (and most settlement and termination agreements do), the prevailing party in an action to enforce the non-disparagement clause is entitled to recover reasonable attorney fees under CC §1717. This can significantly increase the financial exposure for the breaching party.
A business relationship sours. The parties negotiate a termination agreement under which the business pays the departing client $1,000 in exchange for a general release and mutual non-disparagement. Both parties sign. Three weeks later, the former client posts a detailed one-star review on Trustpilot describing their negative experience and warning others to "stay away."
Legal analysis: The Trustpilot review is a clear breach of the non-disparagement clause. The business is entitled to: (1) demand immediate removal of the review, (2) seek return of the $1,000 settlement payment, (3) pursue additional damages for any provable business losses, and (4) recover attorney fees if the agreement contains a fee-shifting provision.
Demand letter approach: The demand should identify the specific review (include URL, date posted, username), quote the non-disparagement provision verbatim, demand removal within a specified timeframe (typically 10-14 days), demand return of the settlement funds, and warn that failure to comply will result in litigation seeking the full range of damages plus attorney fees.
While non-disparagement clauses are generally enforceable in California, several factors affect their strength:
California's anti-SLAPP statute provides a powerful defense mechanism for parties sued over statements made in connection with a public issue or in a public forum. If you sue over a negative online review and the defendant files an anti-SLAPP motion, they will argue the review is protected speech. If the motion succeeds, you could be ordered to pay the defendant's attorney fees. However, courts have generally held that anti-SLAPP does not protect speech that violates a contractual non-disparagement obligation freely agreed to by the parties. The key is proving the enforceable contract existed. Always ensure your non-disparagement clause is well-drafted and properly executed before pursuing enforcement.
If you suspect a former client or business partner posted an anonymous negative review in violation of a non-disparagement clause, you can often establish authorship through: (1) timing of the post relative to the agreement signing, (2) specific details in the review that only the contracting party would know, (3) subpoena of IP address records from the review platform, and (4) linguistic analysis matching the review to known writings by the suspected party. Document everything before sending a demand letter.
To maximize enforceability and ease of enforcement, non-disparagement clauses should: define "disparagement" broadly but clearly, specify that it covers all online platforms including social media, include an explicit clawback or liquidated damages provision, require removal within a specific timeframe upon notice, contain a mutual attorney fees provision, and state that injunctive relief is an available remedy. These provisions dramatically strengthen your position when sending a demand letter for violation.
California provides a comprehensive range of remedies for breach of contract, designed to place the injured party in the position they would have occupied had the contract been fully performed. The type and amount of damages available depend on the nature of the breach, the contract terms, and the provable harm.
Compensatory damages are the most common remedy and represent the direct financial loss caused by the breach. Under CC §3300, damages must be a natural and proximate result of the breach and must be certain in amount (not speculative). The measure of compensatory damages is generally the difference between the value of the performance promised and the value of the performance actually received.
Consequential damages compensate for indirect losses that result from the breach but were foreseeable at the time of contracting. Under the rule from Hadley v. Baxendale (adopted in California), consequential damages are recoverable if they were within the reasonable contemplation of the parties when the contract was formed. Examples include:
Note: The plaintiff has a duty to mitigate consequential damages by taking reasonable steps to minimize losses after the breach. Failure to mitigate reduces the recoverable amount.
Liquidated damages are a pre-agreed sum specified in the contract to be paid in the event of a breach. Under CC §1671, liquidated damages provisions in non-consumer contracts are presumed valid unless the party challenging the provision proves the amount was unreasonable at the time the contract was made. For consumer contracts, the presumption is reversed. A valid liquidated damages clause:
Specific performance is an equitable remedy where the court orders the breaching party to actually perform their contractual obligations rather than simply pay damages. Under CC §3384-3395, specific performance is available when:
Specific performance is commonly granted in real estate transactions (because each parcel of land is considered unique) and in contracts for rare or irreplaceable goods. It is generally not available for personal service contracts due to Thirteenth Amendment concerns.
Restitution aims to restore the injured party to the position they were in before the contract was made, rather than placing them in the position they would have been in had the contract been performed. It requires the breaching party to return any benefits conferred by the non-breaching party. Restitution is particularly relevant when:
California Civil Code §1717 provides that if a contract includes a provision for attorney fees to one party in the event of litigation, the prevailing party in any action on the contract is entitled to attorney fees — regardless of which party the clause was intended to benefit. This reciprocity rule is a powerful tool in breach of contract cases because:
Always check the contract for an attorney fees clause before filing suit. If the contract includes one, reference it in your demand letter — it significantly increases settlement leverage.
Punitive damages are generally not available for breach of contract in California. The purpose of contract damages is compensation, not punishment. However, punitive damages may be available in limited circumstances where the breach also involves an independent tort, such as:
To recover punitive damages, the plaintiff must prove by clear and convincing evidence that the defendant acted with oppression, fraud, or malice (CC §3294). This is a significantly higher standard than the preponderance of evidence used for compensatory damages.
In your demand letter, itemize every category of damages you are claiming. Include direct losses, consequential damages, interest, and attorney fees if applicable. Present a clear damages calculation with supporting documentation. Courts and opposing counsel take detailed, well-documented damages claims more seriously, which increases settlement leverage.
Estimate your potential recovery and evaluate whether pursuing a demand letter or litigation is financially justified. Enter your case details below for a real-time analysis. This calculator provides estimates only and should not substitute for professional legal advice.
Use these templates as a starting point for your breach of contract demand letter. Replace all bracketed items with your specific information. These templates reflect California law and should be adapted to your circumstances. Consider having an attorney review before sending.
[YOUR NAME] [YOUR ADDRESS] [CITY, STATE ZIP] [YOUR EMAIL] [YOUR PHONE] [DATE] VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED [RECIPIENT NAME] [RECIPIENT ADDRESS] [CITY, STATE ZIP] Re: Demand for Cure and Payment — Breach of Contract Dear [RECIPIENT NAME]: I write to notify you of your material breach of the [CONTRACT NAME/TYPE] entered into between us on [DATE] (the "Agreement") and to demand immediate cure and compensation for damages sustained. FACTUAL BACKGROUND On [DATE], you and I entered into the Agreement whereby [BRIEF DESCRIPTION OF CONTRACT TERMS AND OBLIGATIONS]. Under Section [X] of the Agreement, you were obligated to [SPECIFIC OBLIGATION]. I have fully performed all of my obligations under the Agreement, including [DESCRIBE YOUR PERFORMANCE]. BREACH On or about [DATE OF BREACH], you breached the Agreement by [SPECIFIC DESCRIPTION OF BREACH]. This breach is material because [EXPLAIN WHY THE BREACH IS MATERIAL AND DEFEATS THE PURPOSE OF THE CONTRACT]. DAMAGES As a direct and proximate result of your breach, I have suffered the following damages: 1. [CATEGORY 1]: $[AMOUNT] — [BRIEF EXPLANATION] 2. [CATEGORY 2]: $[AMOUNT] — [BRIEF EXPLANATION] 3. [ADDITIONAL CATEGORIES AS APPLICABLE] Total damages: $[TOTAL AMOUNT] LEGAL BASIS Under California Civil Code sections 1619-1633, a party who breaches a contract is liable for all damages naturally arising from the breach. The statute of limitations for breach of a written contract is four years under CCP section 337. [IF APPLICABLE: The Agreement contains an attorney fees provision in Section [X]. Pursuant to California Civil Code section 1717, the prevailing party in any action to enforce this Agreement is entitled to recover reasonable attorney fees and costs.] DEMAND I hereby demand that you: 1. Cure the breach by [SPECIFIC CURE DEMANDED] within [14/30] days of this letter; 2. Pay the sum of $[AMOUNT] representing damages sustained; and 3. Confirm in writing your intent to comply with all remaining terms of the Agreement. If I do not receive a satisfactory response within [14/30] days from the date of this letter, I will pursue all available legal remedies, including filing a civil action seeking the full amount of damages, attorney fees, costs of suit, and any other relief to which I may be entitled. This letter is not intended to be a complete statement of all claims, rights, or remedies available to me, all of which are expressly reserved. Sincerely, [YOUR NAME]
[YOUR NAME / COMPANY NAME] [YOUR ADDRESS] [CITY, STATE ZIP] [YOUR EMAIL] [YOUR PHONE] [DATE] VIA CERTIFIED MAIL AND EMAIL ([RECIPIENT EMAIL]) [RECIPIENT NAME] [RECIPIENT ADDRESS] [CITY, STATE ZIP] Re: Breach of Non-Disparagement Clause — Demand for Removal and Return of Settlement Funds Dear [RECIPIENT NAME]: This firm represents [CLIENT NAME / I am writing on behalf of myself] regarding your breach of the Non-Disparagement provision contained in the [SETTLEMENT AGREEMENT / TERMINATION AGREEMENT / SEPARATION AGREEMENT] executed by the parties on [DATE] (the "Agreement"). THE NON-DISPARAGEMENT OBLIGATION Section [X] of the Agreement provides, in relevant part: "[QUOTE THE EXACT NON-DISPARAGEMENT CLAUSE FROM YOUR AGREEMENT]" In exchange for your agreement to this and other terms, [CLIENT/I] paid you the sum of $[SETTLEMENT AMOUNT] on [PAYMENT DATE]. YOUR BREACH On or about [DATE OF POST], you posted a [NUMBER]-star review on [TRUSTPILOT / GOOGLE / YELP / OTHER PLATFORM] under the [USERNAME / ACCOUNT NAME] "[USERNAME]" at the following URL: [EXACT URL OF THE REVIEW] The review states, in relevant part: "[QUOTE THE KEY DISPARAGING LANGUAGE]" This review constitutes a clear and unambiguous violation of the Non-Disparagement provision quoted above. The statements are derogatory, are intended to harm [CLIENT'S/MY] business reputation, and were published after you executed the Agreement and received the settlement payment. [IF ANONYMOUS: Although the review was posted under [an anonymous / a pseudonymous] account, we have identified you as the author based on [THE TIMING OF THE POST, SPECIFIC DETAILS THAT ONLY YOU WOULD KNOW, AND OTHER IDENTIFYING INFORMATION]. We are prepared to subpoena platform records to confirm authorship if necessary.] DAMAGES AND CONSEQUENCES Your breach of the Non-Disparagement clause has caused and continues to cause the following harm: 1. Reputational damage to [CLIENT'S/MY] business, which relies on positive online reviews for customer acquisition 2. Loss of prospective customers who have viewed the disparaging review 3. The review has lowered [CLIENT'S/MY] overall rating on [PLATFORM] from [X] stars to [X] stars [IF CLAWBACK PROVISION EXISTS: Additionally, Section [X] of the Agreement provides that breach of the Non-Disparagement clause entitles [CLIENT/ME] to recover the settlement funds paid. Accordingly, you are obligated to return the $[SETTLEMENT AMOUNT] paid to you under the Agreement.] DEMAND I hereby demand that you take the following actions within ten (10) calendar days of the date of this letter: 1. REMOVE the review posted on [PLATFORM] at [URL] in its entirety; 2. REMOVE any and all other negative, disparaging, or derogatory content about [CLIENT/ME] posted on any other platform, website, or social media account; 3. RETURN the full settlement payment of $[SETTLEMENT AMOUNT] via [CERTIFIED CHECK / WIRE TRANSFER] to [PAYMENT DETAILS]; 4. CONFIRM in writing that you have complied with all of the above demands and will not post further disparaging content; and 5. PAY the sum of $[AMOUNT] representing additional damages sustained as a result of your breach. LEGAL CONSEQUENCES If you fail to comply with the above demands within the specified timeframe, [CLIENT/I] will pursue all available legal remedies without further notice, including but not limited to: - Filing a civil action for breach of contract seeking compensatory damages, the settlement clawback amount, and any other provable losses; - Seeking a temporary restraining order and preliminary injunction compelling removal of all disparaging content; - Recovering attorney fees and costs pursuant to [SECTION X OF THE AGREEMENT / CC section 1717]; and - Seeking any additional relief the court deems appropriate. Please note that California Civil Code section 1717 provides for recovery of attorney fees to the prevailing party where the contract contains an attorney fee provision. Continued refusal to cure this breach will only increase your financial exposure. This letter constitutes a good faith attempt to resolve this matter without litigation. I strongly encourage you to comply promptly. Sincerely, [YOUR NAME] [TITLE, IF APPLICABLE]
[YOUR NAME] [YOUR ADDRESS] [CITY, STATE ZIP] [YOUR EMAIL] [DATE] VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED [RECIPIENT NAME] [RECIPIENT ADDRESS] [CITY, STATE ZIP] Re: Breach of Settlement Agreement Dated [DATE] — Demand for Performance Dear [RECIPIENT NAME]: I am writing regarding the Settlement Agreement and Mutual Release entered into between [PARTY A] and [PARTY B] on [DATE] (the "Settlement Agreement"). You have materially breached the terms of the Settlement Agreement, and I demand immediate cure as set forth below. BACKGROUND On [DATE], the parties executed the Settlement Agreement to resolve [BRIEF DESCRIPTION OF UNDERLYING DISPUTE]. Under the terms of the Settlement Agreement: - [PARTY A] agreed to [OBLIGATION 1, e.g., pay $X, release claims, etc.] - [PARTY B] agreed to [OBLIGATION 2, e.g., cease certain conduct, return property, non-disparagement, etc.] - Both parties agreed to [MUTUAL OBLIGATIONS, e.g., confidentiality, non-disparagement, cooperation, etc.] [PARTY A / I] have fully performed all obligations under the Settlement Agreement, including [DESCRIBE SPECIFIC PERFORMANCE, e.g., payment of $X on DATE]. BREACH Despite receiving the benefits of the Settlement Agreement, you have breached the following provisions: 1. Section [X] — [SPECIFIC PROVISION]: You [DESCRIBE SPECIFIC BREACH, e.g., failed to make the required payment by the deadline, failed to return specified property, violated the non-disparagement clause, etc.] 2. [IF ADDITIONAL BREACHES: Section [X] — [SPECIFIC PROVISION]: You [DESCRIBE ADDITIONAL BREACH]] These breaches are material because they defeat the fundamental purpose of the Settlement Agreement, which was [DESCRIBE THE PURPOSE, e.g., to resolve the dispute finally, to protect business reputation, to ensure payment, etc.]. CONSEQUENCES OF BREACH The Settlement Agreement provides in Section [X] that in the event of a material breach: - [DESCRIBE CONTRACTUAL CONSEQUENCES, e.g., the non-breaching party may revoke the release of claims] - [DESCRIBE ADDITIONAL CONSEQUENCES, e.g., the breaching party must return all settlement funds] - [DESCRIBE FEE PROVISIONS, e.g., the breaching party is liable for attorney fees and costs] Additionally, under California law, a material breach of a settlement agreement allows the non-breaching party to either enforce the agreement or rescind it and pursue the original underlying claims. DEMAND I demand that within fourteen (14) calendar days of this letter, you: 1. [SPECIFIC CURE DEMANDED, e.g., make the past-due payment of $X] 2. [ADDITIONAL CURE, e.g., remove all disparaging content] 3. [ADDITIONAL CURE, e.g., return specified property] 4. Pay $[AMOUNT] for damages caused by the breach, including [ITEMIZE] 5. Confirm in writing your compliance and continued commitment to the Settlement Agreement terms FAILURE TO CURE If you do not cure the breach within the specified period, I will: 1. Treat the Settlement Agreement as rescinded due to your material breach 2. Revive and pursue all original claims that were released under the Settlement Agreement 3. File a new action for breach of the Settlement Agreement seeking full damages, attorney fees, and costs 4. Seek any and all other available legal remedies Time is of the essence. I urge you to take this matter seriously and respond promptly. Sincerely, [YOUR NAME]
[YOUR NAME] [YOUR ADDRESS] [CITY, STATE ZIP] [YOUR EMAIL] [YOUR PHONE] [DATE] VIA CERTIFIED MAIL AND EMAIL [RECIPIENT NAME] [RECIPIENT ADDRESS] [CITY, STATE ZIP] Re: Anticipatory Breach of [CONTRACT NAME] — Demand for Assurance of Performance Dear [RECIPIENT NAME]: I write concerning the [CONTRACT NAME/TYPE] dated [DATE] between [PARTY A] and [PARTY B] (the "Agreement"), under which you are obligated to [DESCRIBE KEY OBLIGATION] on or before [PERFORMANCE DATE]. ANTICIPATORY REPUDIATION On [DATE], you [DESCRIBE THE COMMUNICATION OR CONDUCT INDICATING NON-PERFORMANCE]. Specifically, [PROVIDE DETAILS]: - [QUOTE OR DESCRIBE STATEMENT 1, e.g., "In your email dated [DATE], you stated: '[QUOTE]'"] - [DESCRIBE CONDUCT, e.g., "You have ceased all preparatory activities and have reassigned personnel from this project"] - [ADDITIONAL EVIDENCE, e.g., "You have entered into a conflicting agreement with [THIRD PARTY] that makes performance of our Agreement impossible"] Your [statements / conduct] constitute a clear and unequivocal anticipatory repudiation of the Agreement. Under California law, when a party to a contract communicates an intent not to perform before performance is due, the non-breaching party may treat the contract as immediately breached and pursue damages without waiting for the performance date to arrive. DAMAGES AT STAKE If you fail to perform under the Agreement, I will suffer the following damages: 1. Direct damages: $[AMOUNT] — [EXPLANATION, e.g., the contract price for goods/services that must now be procured from an alternative source at higher cost] 2. Consequential damages: $[AMOUNT] — [EXPLANATION, e.g., lost profits from downstream contracts dependent on your timely performance] 3. Cover damages: $[AMOUNT] — [EXPLANATION, e.g., the difference between the contract price and the cost of substitute performance from another provider] 4. Incidental damages: $[AMOUNT] — [EXPLANATION, e.g., costs of finding replacement, rebooking, administrative expenses] Total estimated damages: $[TOTAL] DEMAND FOR ADEQUATE ASSURANCE Pursuant to the principles recognized under California commercial law, I hereby demand adequate assurance of your performance within ten (10) business days of this letter. Adequate assurance must include: 1. A written confirmation that you intend to fully perform all obligations under the Agreement by the agreed-upon date of [PERFORMANCE DATE]; 2. [IF APPLICABLE: A detailed performance schedule demonstrating your ability to meet the deadline]; 3. [IF APPLICABLE: Evidence of financial capacity to complete performance, such as proof of bonding, insurance, or sufficient inventory]; and 4. [ANY OTHER SPECIFIC ASSURANCE RELEVANT TO YOUR SITUATION] CONSEQUENCES OF FAILURE If I do not receive adequate assurance of performance within the specified period, I will treat your anticipatory repudiation as a present, total breach of the Agreement. I will immediately: 1. Pursue cover by engaging an alternative [provider / vendor / contractor] and hold you liable for all additional costs; 2. File a civil action seeking all compensatory damages, consequential damages, and incidental damages arising from the breach; 3. Seek recovery of attorney fees and costs [IF APPLICABLE: pursuant to Section [X] of the Agreement and CC section 1717]; and 4. Pursue any other legal or equitable remedies available. I reserve the right to accept your repudiation at any time and to pursue immediate legal action without further notice if circumstances require. Sincerely, [YOUR NAME]
Common questions about breach of contract claims in California, including statutes of limitations, damages, non-disparagement violations, and litigation strategy.
In California, a plaintiff must prove four elements to establish a breach of contract claim: (1) the existence of a valid contract between the parties, (2) the plaintiff's own performance of their contractual obligations or a legally recognized excuse for non-performance, (3) the defendant's breach (failure to perform) of one or more terms of the contract, and (4) resulting damages caused by the defendant's breach. All four elements must be established by a preponderance of the evidence. If any one element is missing, the claim fails. The contract can be written, oral, or implied by the parties' conduct, though oral contracts face additional challenges regarding proof of the specific terms.
California has two different statutes of limitations for breach of contract depending on whether the contract is written or oral. For written contracts, the statute of limitations is four years from the date of breach under Code of Civil Procedure section 337. For oral contracts, the limitations period is two years under CCP section 339. The clock generally starts running on the date the breach occurs, though the "discovery rule" may delay the start if the breach was hidden or not reasonably discoverable. For ongoing obligations like non-disparagement clauses, each new violation may constitute a separate breach with its own limitations period. It is critical to act promptly once a breach is discovered to preserve your legal rights.
Attorney fees are recoverable in a California breach of contract case only if the contract contains an attorney fees provision. Under California Civil Code section 1717, if the contract provides that attorney fees shall be awarded to the prevailing party (or even to just one party), the court will award reasonable attorney fees to whichever party prevails in the litigation. This reciprocity rule means that even if the clause only names one party, the other party can recover fees if they win. Without an attorney fees clause in the contract, each party generally bears their own legal costs under the "American Rule." Some statutory causes of action that may accompany a breach of contract claim (such as unfair business practices under Business and Professions Code section 17200) have their own fee-shifting provisions.
A material breach is a substantial failure to perform that goes to the very essence of the contract and defeats its fundamental purpose. When a material breach occurs, the non-breaching party is excused from further performance and may immediately sue for total damages. Courts consider several factors in determining materiality: the extent of non-performance, whether the injured party received substantially what they bargained for, the adequacy of monetary compensation, the likelihood that the breaching party will cure, and whether the breach was willful. A minor (or partial) breach, by contrast, is a deviation from the contract terms that does not substantially defeat the contract's purpose. With a minor breach, the non-breaching party must continue performing their own obligations but may recover damages for the deficiency. The distinction matters enormously because it determines whether you can walk away from the deal or must continue performing.
Yes, in most cases, posting a negative review on Google, Yelp, Trustpilot, or any other platform after signing an agreement with a non-disparagement clause constitutes a breach of contract. The enforceability of the clause depends on several factors: the clause must be supported by adequate consideration (such as a settlement payment or severance), the language must be clear enough to cover online reviews, and the review must contain content that a reasonable person would consider disparaging. Importantly, the Consumer Review Fairness Act (which prohibits businesses from silencing consumers through form contracts) generally does not apply to individually negotiated settlement or termination agreements. If the review is posted anonymously, the author can often be identified through timing, content analysis, and platform subpoenas. The remedies for a proven violation typically include removal of the review, return of settlement funds (clawback), additional compensatory damages, and attorney fees if provided in the agreement.
Yes, you can potentially recover the settlement money if the other party breaches the settlement agreement. If the agreement contains an explicit clawback provision (a clause stating that settlement funds must be returned upon breach), enforcing the clawback is relatively straightforward. Even without an express clawback clause, you have options. You can argue that the breach was material, which entitles you to rescission (undoing) of the settlement agreement and return of the funds under restitution principles. Alternatively, you can seek to enforce the settlement agreement while also pursuing additional damages for the breach. In non-disparagement cases specifically, courts have been receptive to ordering return of settlement funds where the breaching party received money specifically in exchange for the promise not to disparage and then violated that promise. The strongest position is to have a clear clawback provision in the original agreement, which is why it is important to include one during negotiation.
California law provides several categories of damages for breach of contract. Compensatory (general) damages cover the direct financial loss from the breach, measured as the difference between the promised performance and what was actually received. Consequential (special) damages cover foreseeable indirect losses, such as lost profits from downstream business affected by the breach. Liquidated damages may be recovered if the contract specifies a pre-agreed amount payable upon breach, provided the amount is reasonable and not a penalty. Restitution can require the breaching party to return benefits conferred by the injured party. Specific performance (a court order to actually perform the contract) is available when money damages are inadequate, such as in real estate transactions. Attorney fees are recoverable if the contract contains a fee provision, under CC section 1717. Punitive damages are generally not available in pure breach of contract cases but may apply if the breach also involves fraud or other tortious conduct under CC section 3294.
While California law does not generally require a demand letter before filing a breach of contract lawsuit, sending one is strongly recommended for several reasons. First, many contracts contain provisions requiring written notice and an opportunity to cure before litigation can be initiated; failing to comply with these provisions may be used as a defense. Second, a demand letter demonstrates good faith and a willingness to resolve the dispute without court intervention, which judges view favorably. Third, the demand letter starts a documented paper trail that supports your case if litigation becomes necessary. Fourth, in practice, a well-written demand letter resolves many disputes without the expense and delay of a lawsuit, particularly when the breach is clear and the legal exposure is significant. Fifth, if the contract has an attorney fees clause, the demand letter puts the breaching party on notice that they face fee liability, which increases settlement leverage. The cost of a demand letter is a fraction of litigation costs, making it almost always the prudent first step.
Anticipatory breach (also called anticipatory repudiation) occurs when one party to a contract clearly and unequivocally communicates, before performance is due, that they will not or cannot perform their obligations. This can happen through an explicit statement ("I will not deliver the goods") or through conduct that makes performance impossible or clearly indicates an intent not to perform (such as selling the promised goods to someone else). Under California law, the non-breaching party has two options upon receiving an anticipatory repudiation: (1) treat the contract as immediately breached and sue for damages without waiting for the performance date, or (2) wait for the performance date and sue if performance does not occur. The non-breaching party may also demand adequate assurance of performance; if the repudiating party fails to provide assurance within a reasonable time, the repudiation is confirmed. Anticipatory breach allows the injured party to mitigate damages promptly by seeking substitute performance rather than waiting helplessly for a deadline they know will not be met.
Yes, California courts can issue injunctive relief to stop an ongoing breach of contract. To obtain a preliminary injunction, you must demonstrate: (1) a likelihood of prevailing on the merits of your breach of contract claim, (2) that you will suffer irreparable harm without the injunction (harm that money damages alone cannot adequately compensate), (3) that the balance of hardships tips in your favor, and (4) that the injunction serves the public interest. Injunctions are particularly appropriate in non-disparagement cases where a negative review continues to damage your business reputation with each day it remains posted, because the ongoing reputational harm is difficult to quantify in dollars and compounds over time. Courts may issue a temporary restraining order (TRO) on an emergency basis, followed by a preliminary injunction after a hearing. In cases involving continued posting of disparaging content, courts have ordered defendants to remove reviews and cease further disparaging activity. A bond may be required when an injunction is issued.
Without a non-disparagement clause, your options for addressing negative online reviews are significantly more limited. Negative reviews are generally considered protected speech under the First Amendment and California's robust anti-SLAPP statute (CCP section 425.16). To have a viable claim against a negative review in the absence of a non-disparagement agreement, you would need to prove the statements are demonstrably false and constitute defamation (libel, since the statements are written). This requires showing: (1) the reviewer made a false statement of fact (not merely opinion), (2) the statement was published to a third party, (3) the reviewer acted with at least negligence regarding the truth, and (4) the statement caused actual damages. Opinion statements ("I didn't like the service") and truthful statements are protected regardless of how negative they are. If you file a lawsuit that is deemed a SLAPP suit, you could be ordered to pay the defendant's attorney fees. This is precisely why non-disparagement clauses are so valuable: they create a contractual basis for enforcement that sidesteps the defamation and free speech issues.
The timeline for a breach of contract case in California varies significantly depending on the approach and complexity. A demand letter can often resolve the matter within 30 to 60 days if the other party is willing to negotiate. If litigation is necessary, here is a general timeline: filing the complaint and serving the defendant takes 1-2 months; the defendant has 30 days to respond; discovery (exchanging documents, depositions, written questions) typically takes 6-12 months; motion practice and pre-trial proceedings add another 2-4 months; and trial preparation and the trial itself may take an additional 1-3 months. In total, a straightforward breach of contract case that goes to trial typically takes 12 to 18 months from filing to resolution. Complex commercial disputes with multiple parties, extensive discovery, or expert witnesses can take 2 to 3 years. Many cases settle during the litigation process, with the majority resolving before trial. Mediation or arbitration (if required by the contract) can significantly shorten the timeline. Small claims court is an option for claims under $10,000 (or $5,000 for businesses) and can resolve in 2-3 months.
Gather these documents and materials before sending a demand letter or consulting with an attorney. Check off each item as you collect it.
Schedule a consultation to discuss your case and explore your legal options.