California Statute of Limitations: Written vs. Oral Contracts

When it comes to breaches of contract, the amount of time you have to sue (that is, the “statute of limitations”) depends on whether the contract was made verbally or in writing. In California:

• Written contracts have a four-year statute of limitations while
• Oral contracts have a two-year statute of limitations.

Although knowing how much time you have to file suit is crucial, it’s not the only thing you need to know before entering into the lawsuit process. Review the details provided below to determine whether your agreement is enforceable to begin with, then contact William B. Hanley, Attorney At Law for help filing a breach of contract lawsuit.

Written Contracts and California Law

There are two key reasons why every business handbook warns its readers to get their agreements in writing: because oral contracts are much more difficult to enforce, and because not every kind of agreement is enforceable unless it’s written.

Under Civil Code Section § 1624 (a), the following types of contracts are only enforceable if they’re in writing:

• Contracts designed to take more than one year to complete
• “Special promises” to pay for someone else’s debt, default, or miscarriage
• Most real estate purchases and sales, as well as leases (commercial or residential) that last more than one year
• Agreements that will not be completed within the promisor’s lifetime
• Promises made by real property purchasers to pay an “indebtedness secured by a mortgage or deed of trust”
• Loans exceeding a specified amount of money (in California, this amount is $100,000)

Regardless of the type of agreement you entered into, the chances of enforcing it will be much higher as long as the contract is in writing. If, on the other hand, you made a verbal agreement that falls within any of the above-mentioned categories, the chances of enforcing the contract are very slim. That being said, there are a few exceptions that an experienced attorney could argue on your behalf — such as if the other party tricked or coerced you into a verbal agreement, knowing that the contract should have been in writing.

Oral Contracts and California Law

Oral contracts are legally binding in the state of California. However, there is generally a lot of confusion among individuals and business owners alike as far as what constitutes a valid one. For clarity’s sake, let’s review the requirements for a legally binding and enforceable oral contract:

• Specific Terms. If one party says he’s going to pay you an unspecified amount of money for undefined services by an undetermined due date, that is almost certainly not an enforceable oral contract. The more specific the terms, the better your chances of enforcing the agreement.
• A Meeting of the Minds. In contract law, the phrase “meeting of the minds” refers to both parties understanding the terms they’ve agreed to. If, during a breach of contract dispute, it appears that the parties were never on the same page about the terms of their deal, the chances of enforcing an oral contract are very slim.

So, proving the validity of an oral contract becomes much simpler if:

• Witnesses testify that a deal was in fact struck and insist that both parties fully understood the terms of the contract at the time the agreement was made
• Witnesses attest to the same terms that you (the plaintiff) are claiming to have been breached by the other party (the defendant)
• There is a transactional history or other “paper trail” that coincides with your claim (for instance, you have a series of checks from the defendant but they’ve failed to pay the final installment for your services)

As a business litigation attorney with more than 40 years of experience, I recognize that this is a lot of information to absorb all at once. To gain an even better understanding of contract enforceability, I invite you to read about breach of contract lawsuits.

Orange County Breach of Contract Attorney

When the time comes to enforce a contract, you want an attorney who has the experience, commitment, and tenacity to push for the results your business needs. As a business owner myself — as well as a commercial litigator with decades of experience — I will spare no effort in the fight to keep your promisors accountable.

You now know that the statute of limitations is two years for an oral contract and four years for a written one. Don’t wait until the last moment to begin the lawsuit process. Schedule a consultation with me today so we can begin to build your case.