Contracts and Agreements

Guide to Contracts and Agreements in California

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Here are contract related laws specific to California. For more general contract law, such as “What is a contract?”, see our Guide to Contracts and Agreements in the U.S.

I signed a contract but now I changed my mind. What are my options?

Cancelling certain types of contracts: In California, consumers have the right to
cancel
 certain contracts (no reason necessary) for certain types of sales or transactions, within a specified time period after signing the contract. These are often referred to as cooling off periods. See the list of contract cooling off periods.

And whether or not there is a cooling off period, there is always the possibility of cancelling or terminating any agreement or contract you enter into, at any time, but there is often a cost associated with this (sometimes a “termination fee” or “cancellation fee.”) Check your contract for this provision – it’s often called a section called “termination” (but if the contract says nothing about this then you will need to negotiate this with the other parties to the contract).

Cancelling contracts in general: You may also have a right to cancel a contract if:1CA Civ. Code Sec. 1689

  • the other party lied about a substantial aspect of the transaction (and you can prove it),
  • you gave consent by mistake or under extreme pressure (and you can prove it),
  • the agreement falls through for some reason not that was not your fault (…and yes you must prove it)

How do I enforce a contract in California?

If the other party to a contract is not doing what they agreed to do, or has violated the agreement in a significant way, this is called a “breach of contract.” You can start out by simply declaring to them that they have breached the agreement and you intend to enforce it. If they don’t comply, then you may want to file a lawsuit against them.

Importantly, you must be able to prove your claims to the court. In the case of a “handshake deal” or “oral agreement,” you may need to prove that there was a binding agreement in the first place (unless the other party concedes this). This can be difficult unless you have witnesses or circumstantial evidence of some kind.

To sue for relatively small amounts of money, you can use California Small Claims court.

To sue as an individual, you can generally sue for up to $10,000 in small claims court.

To sue as a business:

If your business is “incorporated” as an LLC, corporation, or other entity, you can sue for up to $5,000 in small claims court. If you are a “general partnership” or “sole proprietorship,” you can sue for up to $10,000 in small claims court.2California Code of Civil Procedure Sections 116.220 & 116.221

If you need help enforcing a contract, we personally recommend we personally recommend Rocket Lawyer.3NOTE: Law Soup LLC may receive compensation from Rocket Lawyer if you use any of their services. We stand by every company we endorse.  Your purchases from these companies through our links help keep us around to provide you with free legal info! Thank you.

Can I get my attorney fees paid for if I sue to enforce a contract and win?

The “prevailing party” as it’s known, may get the losing party to pay for the winner’s (reasonable) attorney’s fees ONLY if authorized specifically by the contract at issue, or by the specific statute you are suing under.4Code of Civil Procedure Sec 685.040 If the contract provides for an “attorneys fee” clause that applies to one party only, this is generally automatically interpreted as mutual and reciprocal unless a specific statute says otherwise.5Civ Code 1717

Are “non-compete” agreements enforceable in California?

Most agreements that prohibit an employee from working for a competing company are not valid. However, these may be enforceable against prior owners of a company. See our Guide to Employee Rights for more.

For the following questions see our Guide to Contracts in the U.S.

  • What is a contract?
  • Are all agreements enforceable?What is a “handshake deal”?
  • What are common types of contract clauses?
  • What is a “limitation of liability” clause?
  • What is indemnification or indemnity?
  • What is a “merger” (or “integration” or “Entire Agreement”) clause?
  • What is an “assignment” or “no assignment” clause?
  • What is a “severability” clause?

Resources

How can I get a contract drafted?

For affordable customized contracts, we personally recommend Rocket Lawyer.6NOTE: Law Soup LLC may receive compensation from Rocket Lawyer if you use any of their services. We stand by every company we endorse.  Your purchases from these companies through our links help keep us around to provide you with free legal info! Thank you.

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