California's Statute of Limitations: Breach of Contract

Although there is no limitations period for murder in California, you do not have forever to bring a lawsuit in a civil case. A statute of limitations is the government's way of encouraging prompt litigation, while evidence is available and memories are still fresh. If the action you want to file is for breach of a written contract, you will have four years from the date the contract was broken to file a lawsuit. The limitations period on oral contracts is two years.

A contract in California is an agreement between at least two people under which all parties agree to take some action or refrain from some action. The action may be anything from paying money to rendering services, and one party's promise is given in consideration for another person's promise. For example, one party agrees to pay money in exchange for the other's services, not independent of them.

But contracts often contain more than the simple description of the consideration exchanged. They can include specifications on timing, location and other matters to which all parties agree. Some are material and some are not. If a party does not live up to a material promise in the contract, it is called a breach.

Read More: Elements of a Breach of Contract

Most oral and written contracts are valid in California and can be enforced with a breach of contract action. However, some contracts must be in writing to be valid, like a contract for sale or transfer of real property, under a law called the Statute of Frauds.

But, if you have a handshake agreement to do work for a neighbor and they refuse to pay, you can sue. Just be careful, because it's harder to prove the terms of an oral contract than a written one, and the California statute of limitations is shorter.

A statute of limitations is a law setting out the time you have to file a lawsuit. Most lawsuits in California must be filed within a certain period of time and, generally, if you miss filing within that statutory time frame, you can't sue at all.

There is not just one statute of limitations in California, but many. Each applies to a particular type of legal claim. When it comes to the breach of contract statute of limitations in California, California Civil Code Section 337 sets out a four-year statute of limitations for written contracts and Section 339 sets out a two-year statute of limitations for an oral contract.

That means that, generally, you can file an action for breach of a written contract in California at any time within the four years after the contract was broken. You can file for damages resulting from breach of an oral contract within the two years from the date the contract was broken. But some exceptions apply.

One of the exceptions to the California breach of contract statute of limitations is called the delayed discovery rule. This is a legal doctrine that stops the running of, or "tolls" a limitations statute during periods of time in which the person bringing suit did not discover – or could not have discovered with reasonable diligence – the wrongful act that would provide a cause of action.

This is most often applied in personal injury cases in California. But the courts have also allowed this to effectively allow a lawsuit after the running of the statute in breach of contract cases. The claim accrues when the plaintiff discovers, or could have discovered through reasonable diligence, the breach of contract.

If you have contracted with a government agency, and the agency or its employee breached the contract, you have to file a claim with the government agency before you file a lawsuit with a California court. Called an "administrative claim," you have to use the government's form to file it. You usually have a year from the date of the breach to file the administrative claim for breach of contract. Only after the government denies or files to respond to your claim can you then file a lawsuit in court.