Stokes O'Brien

When does a Contract Exist in California?

Posted in Business and Real Estate Litigation on October 31, 2015

It probably goes without saying that a plaintiff must actually have a contract in order to sue for breach of contract.  However, this issue is much more complex than some people imagine.  Contract existence depends on a myriad of factors, including:

  1.  Contract Conditions:  Are there any events that are required to occur in order to create the contract (i.e., a condition precedent)?  To make matters more interesting, conditions are be either express (actually in the agreement language) or implied by the circumstances.
  2. Contract Consideration:  Contracts are not valid, and not enforceable in a breach of contract lawsuit, unless the contract is supported by what the law calls “consideration.”  This means the parties must exchange something (a promise or act) of legal value.  Courts do not consider the adequacy of consideration.  However, a gift, where there’s no detriment to one side, is not sufficient.  Also, something done in the past, and something a party is already required to do, are not sufficient.
  3. Contract Offer and Acceptance:  One party must accept the other party’s offer.  The parties must exhibit a present manifestation to enter into an agreement.  This is measured on an objective (not subjective) standard, i.e., it’s whether a reasonable would say: “Yes, those two people agreed.”  The subjective intent of the parties is totally irrelevant.

If you’re considering filing, or need to defend, a breach of contract lawsuit in San Diego, contract our San Diego business litigation attorneys for a free consultation.