A contract is an agreement between two or more parties with specific terms and promises in return for a valuable benefit. Contracts may be written or oral. Of course if the contract is in writing it is much easier to demonstrate all of the terms to which the parties agreed.
Written contracts often have terms which may affect lawsuit strategy. For example, a written contract may have a term which requires that any lawsuit to enforce the contract be filed in a particular location (i.e. a particular county or state). Therefore, even if you live in another state, if the contract requires that a lawsuit be filed in California, the court will generally enforce such a requirement.
A written contract may also have a provision which requires the parties to arbitrate or mediate any dispute arising out of the contract. California courts favor such alternative forums for resolving disputes because the courts are overloaded with cases. Even written contracts which state that the parties “may” arbitrate a dispute have been determined to be mandatory. Therefore, despite the use of the phrase “may arbitrate,” the courts will generally enforce the arbitration term.
In California, except in certain circumstances, a person who has suffered damages for breach of a written contract has four years from the date of the breach to file a lawsuit. In the case of an oral contract, the time within which to file a lawsuit is two years from the date of the breach.