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What Happens When a Business Contract Is Breached in California?

Posted on 6/6/2018 by in Business Law business contract
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When two parties sign a contract, each is expected to carry out their end of the deal. But if one party fails to deliver, the other may pursue legal action.

During business deals and other types of transactions, it’s common for two or more parties to sign a contract to ensure each party holds up to their end of the deal. When one of those parties fails to carry out their terms of the contract, they’ve breached the contract and must face the legal ramifications if the matter can’t be settled outside of court.

What Constitutes a Breach of Contract?

The non-breaching party must be able to prove that the breach existed. California law states that in order to legally move forward with a breach of contract case, the party who states that the contract was breached must prove that a contract existed; that the other party’s breach negatively impacted them; that the other party did not follow through with the contract; and that they faced damages as a result of the other party’s breach.

Types of Breach of Contract

The different degrees of breach of contract in California include total or partial. In a total breach, one party doesn’t fulfill any of their obligations, and in a partial breach, they only fulfill some. California law also determines whether a breach is material or immaterial. A material breach negatively affects the first party, whether the obligations are completely or partially neglected. An immaterial breach happens when the other party performs their obligations but not exactly as outlined in the contract. It doesn’t have as severe an impact on the non-breaching party.

 

A partial breach is often similar to an immaterial breach, but Sackett v. Spindler (1967) 248 CA2d 220 outlined the following factors to determine whether a partial breach could be material:

  •      -Did the non-breaching party receive the anticipated benefit?
  •      -How much would the non-breaching party need to be compensated for damages incurred?
  •      -Has the breaching party already attempted to perform their obligations, or do they have plans to do so?
  •      -What is the level of hardship inflicted on the non-breaching party?
  •      -Was this a willful, negligent, or innocent failure on the part of the breaching party?
  •      -How certain or uncertain is it that the breaching party will perform their obligations?

 

Each of these factors will be taken into consideration by a judge, and an attorney well versed in business law can help the non-breaching party determine whether the case will constitute a breach of contract in the California court system. If you have found yourself in a possible breach of contract situation, reach out to the Law Offices of Tyler Q. Dahl, as we have helped many California businesses settle breaches of contract in and outside the court system. We can help you explore your legal options. Give us a call at 916-545-2790 or contact us online to schedule a consultation.