Our firm recently obtained a large, 6-figure breach of contract award on behalf of a professional woman who filed suit more than 4 years from the date of the first breach. We successfully argued that the subject business and employment agreements were executory agreements, and as such, our client was not required to sue on the first signs of breach.
An executed contract is one the object of which is fully performed; all others are executory (Civ. Code, § 1661). “Where a contract is still executory, the promisee is not bound to treat the contract as abandoned on the first breach or any particular breach, and the statute of limitations does not begin to run as long as the promisee elects to rely on the contract (Baugh v. Garl (2006) 137 Cal.App.4th 737).
“Whether a breach of a contract is anticipatory or not, when there are ongoing contractual obligations the plaintiff may elect to rely on the contract despite a breach and the statute of limitations does not begin to run until the plaintiff has elected to treat the breach as terminating the contract. In the context of successive breaches of a continuing contractual obligation, where the parties did not mutually abandon or rescind it upon a breach or successive breaches, the injured party can wait until the time arrived for a complete performance by the other party and then bring an action for damages for such breaches. The plaintiff is not bound to treat the contract as abandoned on the first breach of it, or on any particular breach, but has the election to continue to rely on it and the statute of limitations does not begin to run until the plaintiff makes an election. If the injured party disregards the other party’s repudiation of the contract, the statute of limitations does not begin to run until the time set by the contract for performance (Romano v. Rockwell Internat., Inc. (1996) 14 Cal.4th 479)” (Id.)