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Legal Memorandum: Reasonable Time for Performance of a Contract

Issue: IF A COMPLAINT ALLEGES A VIABLE CONTRACT CLAIM UNDER CALIFORNIA LAW, IS THE STATUTE OF LIMITATIONS NOT NECESSARILY A BAR TO THE ACTION?

Area of Law: Business Organizations & Contracts, Litigation & Procedure
Keywords: Reasonable time; No time for performance is specified in a contract
Jurisdiction: California
Cited Cases: 9 Cal. App. 4th 373
Cited Statutes: Civ. Proc. Code § 1657
Date: 01/01/2006

Generally, when a contract does not specify the time within which an option must be exercised, a “reasonable time” is allowed.  Alpern v. Mayfair Markets (2d Dist. 1953) 118 Cal. App. 2d 541, 547.  In making this determination, time, generally, is not of the essence, and in considering what is a “reasonable time” to exercise an option, it is well-established that fairness and equitable considerations are paramount:

Time, in the abstract, is not essential.  It is material so far only as, when associated with other circumstances, it may produce injury or unjust consequences.  The great object of the rule of law on this subject is to prevent injury or wrong; and the main question in each case should be, is there any just cause, because of delay, to object to the [exercise of the option].

 

Clovis Fruit Co. v. California Wine Ass’n (1st Dist. 1919) 40 Cal. App. 623, 626.

Significantly, in an option case, “the question of what constitutes a reasonable time is ordinarily one of fact, to be determined from all the circumstances of the particular case.”  Alpern, 118 Cal. App. 2d at 547.  In considering this fact question, the Alpern court said the jury is to be guided by the following factors:

The facts to be considered in determining the question include, among others, the conduct of the parties, delay to act, acquiescence in delay, whether the delay is for unfair purposes, the construction which the parties themselves […]

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