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Below are some of the elementary basics of California contract law.

Contract law enforces legally binding agreements.

When one party violates a contract, in most cases, damages are limited to recovery of what (or approximately what) the breaching party agreed to perform. 

Generally, damages for breach of contact must be reasonably foreseeable, that is, damages are normally limited to that which was within the parties’ contemplation at the time they entered into the agreement.


There is an enforceable contract if: (1) the terms are clear enough for each party to understand what each party was required to do; (2) Each party agrees to give the other party something of value; (3) The parties agreed to the terms.


1. Neither party is a minor (i.e., under 18 years old;

2. Neither party is of unsound mind;

3. Neither party is being deprived of their civil rights;

4. The contract must involve a lawful matter.


Most contracts may be oral, written, or partly oral and written.  Certain contracts must be in writing, however, to be enforced.

A contract can even be created without words, but solely by intentional conduct by both parties.  But to do so, each party must know, or reasonably should know, that the other party will interpret their conduct as an agreement to enter into a contract.


Contracts can be modified or changed at a later time as long as the parties agree to do so.  The parties can even cancel the first agreement and substitute a whole new agreement (called a “novation”).


To prove that a party (Party B) breached the contract, you must show:

1.    There was a contract; and

2.    That the party claiming the breach (Party A) did everything (or substantially everything) he or she was supposed to do [or, alternatively, was excused from having to do such things];

3.    All conditions required to have occurred, did in fact occur before the Party B had to perform;

4.    Party B did not do what the contract required he or she to do; and

5.    Party A suffered reasonably foreseeable harm due to Party B’s breach.


Further, every contract contains an implied promise of “good faith and fair dealing.”  This means that each party must not interfere with the right of the other party to receive the contract benefits.


The contract terms are interpreted by what the parties intended at the time they created the contract.  Normally, the language is interpreted by their usual and ordinary meaning and by the surrounding circumstances when making the contract.  However, if the parties intended a word to have a special meaning, then the special meaning applies.

Words in a contract are not interpreted in isolation, but in light of the context of the whole contract and the surrounding text.

If, using the general rules of interpretation does not resolve the “meaning of the terms” dispute, then the language is interpreted most strongly against the person who drafted the uncertain language. 

If before the disagreement arose, the parties’ actions indicated the words meant a certain thing, then such actions will be a consideration of the meaning.

If the contract does not specify a time for performance, the law will imply a reasonable time.


In most contracts, a party can assign (transfer) his or her contract benefit rights to another person who was not an original party to the contract.


Mistake: No contract exists if one of the parties is mistaken (but not due to excessive carelessness) about a fact or law if the other party knew about and took advantage of the mistake, and the party would not have entered the contact had he or she known about the mistake.

No contract exists if BOTH of the parties are mistaken about a fact or law the party (seeking to avoid the contract) would not have entered the contact had he or she known about the mistake.

Duress, Menace, Fraud:The  Civil  Code further provides  that  consent (free moral agency) which is necessary in a contract is  not  free  when  it  is  obtained through  duress,  menace, or   fraud.  Example: Pressure, fear, or intimidation caused a person to enter the contact which they would not have entered but for such acts.  Examples include detaining or confining or threatening violence on someone until they sign the agreement.  Even threatening criminal prosecution is a defense. 

Fraudulent inducement is a defense, i.e., the party knowing misrepresented a fact to persuade the other party to enter into the contact, and the other party reasonably relied on the misrepresentation, and the other party would not have entered into the contract had he or she known the true facts.

Waiver: Another defense is where a party knowingly waives (gives up) his or her right to receive the performance of the other party.  The waiver can be written, oral words, or by conduct (actions consistent with a waiver).


California law (and other states, too) require legal actions to be commenced within certain specific time limit or the right to sue may be forever lost.   This is a complex area of law that is riddled with exceptions and variables. You are urged to seek attorney immediately if you wish to pursue a legal matter so that your right to sue is not lost due to the passage of time.   See general article regarding the statute of limitations.


Obviously, there are many more laws, statutes, and case law concerning contracts.  But this article provides you with a thumbnail discussion of some of the basics.

If you are in need of legal counsel or representation, please feel free to contact my office. 


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