📋 What is Breach of Contract?
A breach of contract occurs when one party fails to perform their obligations under a legally binding agreement. Under California law, when someone breaches a contract, the non-breaching party is entitled to damages that put them in the position they would have been in had the contract been performed.
When to Use This Guide
Use this guide if the other party has:
❌ Failed to Perform
Did not deliver goods, services, or payments as promised in the contract
🕑 Delayed Performance
Missed deadlines or failed to perform in a timely manner
🚫 Defective Performance
Delivered goods or services that did not meet contract specifications
⚠ Anticipatory Breach
Communicated they will not or cannot perform before performance is due
Types of Breach Under California Law
🔴 Material Breach
▼A material breach is a substantial failure to perform that goes to the heart of the contract. It defeats the purpose of the agreement and excuses the non-breaching party from further performance. Examples include complete non-delivery of goods, failure to pay the contract price, or delivering goods that are fundamentally different from what was agreed.
Legal Effect: The non-breaching party may terminate the contract and sue for all damages, including lost profits and consequential damages.
🟡 Partial Breach (Minor Breach)
▼A partial or minor breach occurs when there is incomplete or defective performance, but the core purpose of the contract can still be achieved. Examples include late delivery of goods, minor defects in workmanship, or small discrepancies in quantity.
Legal Effect: The non-breaching party must continue to perform but can sue for damages caused by the breach.
🟢 Anticipatory Breach
▼An anticipatory breach (also called anticipatory repudiation) occurs when one party clearly indicates, before performance is due, that they will not perform their contractual obligations. This can be through explicit statement or conduct that makes performance impossible.
Legal Effect: The non-breaching party may immediately treat the contract as breached and sue for damages without waiting for the performance date. Alternatively, they may urge performance and wait. See Taylor v. Johnston (1975) 15 Cal.3d 130.
👍 What You Can Recover for Breach of Contract
- Expectation damages - The benefit of the bargain you expected to receive
- Consequential damages - Foreseeable losses caused by the breach
- Incidental damages - Costs incurred in dealing with the breach
- Specific performance - Court order requiring actual performance (rare)
- Restitution - Return of benefits conferred on the breaching party
⚠ Statute of Limitations
California has strict time limits for filing breach of contract claims:
- Written contracts: 4 years from the date of breach (CCP 337)
- Oral contracts: 2 years from the date of breach (CCP 339)
Do not delay - act quickly to preserve your rights.
⚖ Legal Basis
California provides comprehensive legal protections for parties harmed by contract breaches. These statutes and cases support your claim.
Key California Statutes
California Civil Code Section 3300
The measure of damages for breach of contract is the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom.
California Civil Code Section 3301
No damages can be recovered for a breach of contract which are not clearly ascertainable in both their nature and origin. Damages must be proven with reasonable certainty.
California Code of Civil Procedure 337
Four-year statute of limitations for actions founded upon any instrument in writing (written contracts). The clock starts when the breach occurs.
California Code of Civil Procedure 339
Two-year statute of limitations for actions upon a contract, obligation or liability not founded upon an instrument of writing (oral contracts).
Oasis West Realty v. Goldman (2011) 51 Cal.4th 811
California Supreme Court case establishing the elements of breach of contract: (1) existence of a contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) resulting damages to plaintiff.
Elements You Must Prove
- Valid contract existed - Written, oral, or implied agreement with all required elements (offer, acceptance, consideration, capacity, legality)
- Your performance - You performed your obligations or were excused from doing so
- Defendant's breach - The other party failed to perform their contractual duties
- Causation - The breach caused you harm
- Damages - You suffered actual, ascertainable damages
💡 Written vs. Oral Contracts
While oral contracts are generally enforceable in California, certain contracts MUST be in writing under the Statute of Frauds (Civil Code 1624). These include contracts for the sale of real property, contracts that cannot be performed within one year, and contracts for the sale of goods over $500 (Commercial Code 2201).
✅ Evidence Checklist
Gather these documents before sending your demand letter. Click to check off items as you collect them.
📄 Contract Documents
- ✓ Original signed contract (all pages, exhibits, amendments)
- ✓ Any addendums, modifications, or change orders
- ✓ Purchase orders, invoices, or statements of work
📩 Communications
- ✓ All emails, texts, and letters with the other party
- ✓ Meeting notes and call summaries
- ✓ Any written acknowledgment of the breach
- ✓ Prior demand letters or cure notices
📈 Performance Evidence
- ✓ Proof of your performance (delivery receipts, work product, payment records)
- ✓ Timeline of events showing breach
- ✓ Evidence of defective or non-conforming performance
💰 Damages Documentation
- ✓ Financial records showing losses
- ✓ Replacement or cover costs incurred
- ✓ Lost revenue or profit calculations
- ✓ Expert opinions or appraisals if needed
🔒 Document Everything
Keep originals of all documents. Make copies before submitting anything. Create a chronological timeline of events. Good documentation often determines whether your case succeeds or fails.
💰 Calculate Your Damages
Under California Civil Code 3300, you can recover all damages proximately caused by the breach. Here are the types of damages available.
| Damage Type | Description |
|---|---|
| Expectation Damages | The benefit of the bargain - puts you in the position you would have been in if the contract was performed. This is the primary measure of contract damages. |
| Consequential Damages | Foreseeable losses flowing from the breach (lost profits, lost business opportunities). Must have been reasonably foreseeable at contract formation. See Hadley v. Baxendale. |
| Incidental Damages | Costs incurred in responding to the breach (inspection costs, storage, finding replacement goods or services). |
| Restitution | Return of value conferred on the breaching party. Available when you paid for goods or services not received. |
| Specific Performance | Court order requiring actual performance. Available only when monetary damages are inadequate (unique goods, real estate). Discretionary remedy. |
💡 The Foreseeability Requirement
Under the Hadley v. Baxendale rule (adopted in California), consequential damages are only recoverable if they were reasonably foreseeable at the time of contracting. Special circumstances must be communicated to the breaching party for liability to attach.
Mitigation of Damages
California law requires the non-breaching party to take reasonable steps to mitigate (reduce) damages. You cannot recover for losses you could have reasonably avoided. However, you are not required to take extraordinary measures or make unreasonable expenditures.
📊 Sample Damages Calculation
Example: Software Development Contract Breach
⚠ Note: No Punitive Damages for Contract Breach
Unlike tort claims, punitive damages are generally NOT available for breach of contract in California, even if the breach was intentional. However, if the breach also constitutes fraud, bad faith, or another independent tort, punitive damages may be available for that tort claim.
📝 Sample Language
Copy and customize these paragraphs for your demand letter.
⚡ Generate Your Demand Letter
Fill in the form below to create a customized demand letter for your breach of contract situation.
🚀 Next Steps
What to do after sending your demand letter.
Expected Timeline
Days 1-7
Recipient receives and reviews your demand letter
Days 7-21
They consult with counsel and evaluate their options
Days 21-30
Response with payment, counteroffer, or denial
If They Don't Pay or Respond
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Consult a Business Litigation Attorney
Many offer free initial consultations. They can evaluate your case strength and advise on strategy. Some may take strong cases on contingency.
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Consider Small Claims Court
For claims up to $10,000 (or $5,000 for businesses), California Small Claims Court offers a faster, less expensive option. No attorneys allowed.
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File a Civil Lawsuit
For larger claims, file in California Superior Court. Limited civil jurisdiction covers claims from $10,001 to $25,000. Unlimited civil covers claims over $25,000.
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Consider Alternative Dispute Resolution
Check your contract for mandatory arbitration or mediation clauses. These may be required before litigation.
⚠ Watch the Statute of Limitations
- Written contracts: You have 4 years from the breach to file suit (CCP 337)
- Oral contracts: You have 2 years from the breach to file suit (CCP 339)
A demand letter does NOT toll (pause) the statute of limitations. If your deadline is approaching, consider filing suit immediately.
Need Legal Help?
Complex breach of contract cases often benefit from professional legal guidance. Get a 30-minute strategy call with an attorney to evaluate your case.
Book Consultation - $125California Resources
- California Courts Self-Help: selfhelp.courts.ca.gov - Free forms and guides
- State Bar Lawyer Referral: calbar.ca.gov - Find a certified specialist
- California Civil Code: leginfo.legislature.ca.gov - Full text of all statutes
- California Small Claims: courts.ca.gov/selfhelp-smallclaims.htm