What authority does a court have to accrue interest on a contract where the contract does not stipulate a legal rate of interest?

California, United States of America


The following excerpt is from Olson v. Carter-Jones Collections, C085538 (Cal. App. 2020):

With regard to authority for the accrual of interest, the court relied on Civil Code sections 3287, subdivision (a), 3289, and 3302, as well as Budget Finance Plan v. Sav-On Food Club, Inc. (1955) 44 Cal.2d 565. Civil Code section 3287, subdivision (a) provides, in part: "A person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in the person upon a particular day, is entitled also to recover interest thereon from that day, except when the debtor is prevented by law, or by the act of the creditor from paying the debt. This section is applicable to recovery of damages and interest from any debtor." Civil Code section 3289 provides in part: "(a) Any legal rate of interest stipulated by a contract remains chargeable after a breach thereof, as before, until the contract is superseded by a verdict or other new obligation. [] (b) If a contract entered into after January 1, 1986, does not stipulate a legal rate of interest, the obligation shall bear interest at a rate of 10 percent per annum after a breach." Civil Code section 3302 provides: "The detriment caused by the breach of an obligation to pay money only, is deemed to be the amount due by the terms of the obligation, with interest thereon." "Where there is no express contract covering the matter, the law awards interest on money from the time it becomes due and payable if such time is certain or can be made certain by calculation." (Budget Finance Plan, supra, at p. 572, fn. 6.)

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