Statute of Limitations on Contracts
The statute of limitations on contracts refers to the court prescribed time frame within which an aggrieved party is allowed to file a lawsuit.3 min read
2. When Does the Statute of Limitations Begin to Apply?
3. Do All States Have the Same Statute of Limitations?
4. What Is the California Statute of Limitations on Oral Contracts?
5. Is an Oral Contract Enforceable in California?
6. Disadvantages of Having an Oral Contract
7. What Is the California Statute of Limitations on Written Contracts?
8. What Circumstances Trigger a Tolling of Statute of Limitations in California?
9. Can Contracting Parties Shorten the State's Statutory Statute of Limitations Period?
Updated October 29, 2020:
What Is the Purpose of the Statute of Limitations?
The reason why legislatures prescribe time limits for filing lawsuits is that the passing of time reduces the reliability of evidence.
For example, statutes of limitations establish deadlines for suing. When a suing party fails to file a lawsuit before the time limit, a defendant can defend the suit by invoking the statute of limitations. If the defendant can prove that the statute of limitations can be applied to the suit, the case will be dismissed.
California and other states use the statute of limitations to ensure that everybody gets a fair trial in contract lawsuits.
When Does the Statute of Limitations Begin to Apply?
The statute of limitations comes into effect from the date when a party makes a claim. Typically, courts call the commencement date "accrual" of the "cause of action." It's the point where the plaintiff has a reason to file a lawsuit. However, some circumstances and events can delay the statute of limitations, resulting in a longer duration of the time limit from the period when the defendant committed the breach.
For example, a party wants to sue another for assault and battery and the statute of limitations for these charges is two years. In a typical lawsuit, the plaintiff will be able to sue the defendant two years from the date when the defendant committed the assault and battery.
Do All States Have the Same Statute of Limitations?
States have different statutes of limitations, and federal courts and state courts also have different statutes of limitations. It also varies according to the claims involved in the lawsuit.
What Is the California Statute of Limitations on Oral Contracts?
Section 339 of California's Code of Civil Procedure prescribes a statute of limitations of two years for oral contracts. Under this provision, a plaintiff must sue a defendant within two years from the time an oral contract was breached.
Is an Oral Contract Enforceable in California?
Except where a statute requires a contract to be written, an oral contract is enforceable in California courts. For example, Section 7159 of California's Business & Professional Code requires that home improvement contracts between a property owner and a contractor must in written form.
Disadvantages of Having an Oral Contract
It's difficult to prove an oral contract in court as it requires witnesses and other strong evidence that maybe had to provide.
What Is the California Statute of Limitations on Written Contracts?
Under section 337 of California's Code of Civil Procedure, most written contracts have a four-year statute of limitations. Plaintiffs must sue the defendant within four years of the alleged breach of a written contract, or similar event. However, the section also states that certain written contracts that involve title insurance and real-estate titles will have two-year statutes of limitations.
What Circumstances Trigger a Tolling of Statute of Limitations in California?
Certain circumstances can suspend the statutes of limitations for a period, even when the California statute of limitations seems to have expired, including:
- When a party in the lawsuit is incarcerated, the statute of limitations is suspended under Section 352.1 of California's Code of Civil Procedure.
- If a party in the lawsuit leaves California
- If a party in the lawsuit is a minor
- California courts can also decide to suspend the statute of limitations in exceptional cases where it is required for a fair trial of the lawsuit.
Can Contracting Parties Shorten the State's Statutory Statute of Limitations Period?
California courts permit parties in a contract to add a provision in the contract which reduces the state's prescribed time limit for statutes of limitations. The terms of a contract which shortens a statute of limitations are valid if it allows enough time to pursue legal redress.
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