Statute of Limitations for Business Claims in California: What You Should Know

Dec 18 2025 21:00

When business disputes arise, time is of the essence. In California, every type of legal claim has a statute of limitations — a deadline by which a lawsuit must be filed. If you miss that deadline, you may lose your right to pursue legal remedies altogether.

At DT Law Partners, LLP, our Santa Barbara business attorneys regularly counsel clients on business litigation and the importance of understanding these time limits. Below, we outline the most common statutes of limitations for business claims in California and what business owners need to know.

What Is a Statute of Limitations?

A statute of limitations is a law that sets the maximum time after an event that legal proceedings may be initiated. For business disputes, the clock typically starts when the breach or wrongful act occurs — or, in some cases, when the injured party reasonably discovers the issue.

Failing to act within the prescribed time frame can permanently bar your claim, no matter how strong your case may be.

Common Statutes of Limitations for Business Claims in California

The deadlines vary depending on the type of claim. Here are the most relevant for California business owners:

1. Breach of Written Contract – 4 Years

Under California Code of Civil Procedure (CCP) §337, lawsuits for breach of a written contract must be filed within four years. This includes most commercial agreements, leases, and other written contracts.

2. Breach of Oral Contract – 2 Years

For oral contracts, CCP §339 provides only a two-year statute of limitations. If your business relies on handshake deals or verbal agreements, be aware of this shorter deadline.

3. Fraud – 3 Years

Claims of fraud, such as misrepresentation or concealment, must generally be filed within three years (CCP §338). Importantly, the clock may start when the fraud is discovered rather than when it occurred.

4. Breach of Fiduciary Duty – 3 to 4 Years

Depending on the circumstances, breach of fiduciary duty claims may fall under a three-year or four-year statute of limitations. For example, when financial damages are the primary issue, the three-year period often applies.

5. Business Torts (e.g., Interference with Contract, Negligence) – 2 to 3 Years

Tort claims such as negligent misrepresentation or interference with contractual relations typically carry a two-year to three-year deadline, depending on the facts.

6. Collection of Debts – 2 to 4 Years

If your business is owed money, debt collection claims are subject to statutes of limitations tied to whether the underlying agreement was written or oral.

Why the Statute of Limitations Matters for Businesses

Understanding these deadlines is critical for California business owners because:

  • Delay can destroy your claim – Even if the other party clearly breached an agreement, missing the statute of limitations means your case cannot proceed.

  • Negotiation leverage weakens over time – Knowing your legal deadlines strengthens your position in settlement discussions.

  • Defense strategies may rely on time bars – Businesses facing lawsuits can use expired statutes of limitations as a defense.

Practical Tips for Business Owners

  • Keep accurate records – Written contracts provide not only stronger legal protection but also a longer statute of limitations.

  • Act quickly on disputes – Don’t wait to “see if things work out.” Consult a business attorney early to preserve your rights.

  • Regularly review agreements – Updating contracts can refresh obligations and clarify terms.

  • Seek legal advice immediately – If you suspect a breach, fraud, or business tort, get advice before the clock runs out.

Work with Santa Barbara Business Attorneys Who Understand Deadlines

At DT Law Partners, LLP, we represent businesses in Santa Barbara and throughout California in contract disputes, fraud claims, and commercial litigation. Our attorneys help clients evaluate potential claims, calculate statutes of limitations, and develop strategies to protect their rights.

If you are facing a business dispute — or need to defend against one — don’t wait until it’s too late.