California Civil Code 3287 gives a plaintiff the right to recover prejudgment interest on damages, and it splits that right into two tracks: interest is mandatory when the damages are certain or can be made certain by calculation and vested on a specific day, and it is discretionary when a contract claim involves an unliquidated amount, in which case a court may award interest from a date no earlier than the day the lawsuit was filed.
Mandatory Interest Under Section 3287(a)
Subdivision (a) creates an automatic right to prejudgment interest when three conditions line up. The damages must be certain, or capable of being made certain by calculation. The right to recover them must belong to the plaintiff. And that right must have vested on a specific, identifiable day.1California Legislative Information. California Code Civil Code 3287 – Interest as Damages When all three are met, the court has no discretion to deny interest. It runs as of right from the day the obligation became due.
“Certain” carries most of the weight in this test. A fixed invoice, an agreed loan balance, or an overdue rent payment qualifies because a defendant could sit down with the numbers and calculate exactly what was owed. Claims that require a jury to weigh conflicting evidence before settling on a figure usually do not. If reasonable people could disagree about the amount, the damages probably are not “certain” under subdivision (a).
The statute also carves out two situations where even certain damages do not earn interest under subdivision (a): when the debtor is prevented by law from paying, and when the creditor’s own actions blocked payment.1California Legislative Information. California Code Civil Code 3287 – Interest as Damages The provision reaches broadly. It applies to private parties, to the state, to local governments, and to any political subdivision of the state.
Discretionary Interest Under Section 3287(b)
Not every contract claim involves a fixed dollar amount. When the damages are unliquidated, meaning the exact figure has to be determined through litigation, subdivision (b) still allows prejudgment interest, but only at the court’s discretion. The court also picks the accrual date, and that date cannot be earlier than the day the complaint was filed.2California Legislative Information. California Code CIV 3287 – Interest as Damages
The distinction matters in practice. A contractor suing for the agreed price of completed work has a certain claim under subdivision (a) and gets interest automatically from the payment due date. A contractor suing for the reasonable value of partially completed work on a disputed change order has an unliquidated claim. That contractor might still recover prejudgment interest under subdivision (b), but the judge decides whether to award it and from what date. The filing-date floor is the key constraint. Courts cannot reach back further than the day the complaint was filed, even if the underlying dispute arose years earlier.
How Section 3287 Fits With Section 3288
Section 3287 governs contract-based interest. For obligations that do not arise from a contract, and for every case involving oppression, fraud, or malice, the neighboring statute, Civil Code 3288, gives the jury discretion to award prejudgment interest.3California Legislative Information. California Code Civil Code 3288 – Interest as Damages Most personal injury, property damage, and fraud claims land there rather than under 3287.
The reason is the same “certain” problem. Tort damages generally require a factfinder to assess their value, so they rarely qualify under section 3287(a). Section 3288 fills that gap by handing the jury the power to add interest when the circumstances warrant it. Courts have recognized broader jury discretion under 3288 than under 3287(b), particularly in cases involving bad-faith conduct, where the interest award functions partly as a deterrent.
What Interest Rate Applies
Section 3287 tells you when interest is owed but not at what rate. That answer comes from Civil Code 3289 for contract claims and from the California Constitution for non-contract claims.
Contract Claims With a Stipulated Rate
When a contract specifies an interest rate, that rate continues to apply after a breach until a verdict or other new obligation replaces the contract.4California Legislative Information. California Code Civil Code 3289 – Interest as Damages The stipulated rate has to comply with California’s usury limits. The California Constitution sets a default ceiling of 7% per annum on loans and forbearances, but allows parties to agree in writing to up to 10% for personal, family, or household loans.5California Attorney General. California Constitution Article 15 Usury Banks, credit unions, licensed brokers, and certain other regulated lenders are exempt from these caps entirely.
Contract Claims Without a Stipulated Rate
For contracts entered into after January 1, 1986, that do not specify an interest rate, the default is 10% per annum after the breach. Section 3289(b) explicitly excludes notes secured by a deed of trust on real property from that default.4California Legislative Information. California Code Civil Code 3289 – Interest as Damages
Non-Contract Claims
When the claim does not arise from a contract, the constitutional rate of 7% per annum generally applies.5California Attorney General. California Constitution Article 15 Usury That is the rate most tort plaintiffs will see on their prejudgment interest awards.
Simple or Compound Interest
California law does not give a clean answer on whether prejudgment interest should be simple or compound. The traditional rule favors simple interest, and older appellate decisions hold that interest may not be computed on accrued interest without a specific statutory provision or an agreement between the parties. More recent cases have recognized jury discretion to award compound interest under section 3288, particularly in fraud cases involving wrongful detention of property. The safest working assumption for a section 3287 calculation is simple interest, but compound interest is not off the table when the defendant’s conduct was especially egregious.
Where Section 3287 Stops
Section 3287 covers only prejudgment interest. Once a court enters a money judgment, a separate statute takes over. Code of Civil Procedure section 685.010 sets the default postjudgment rate at 10% per annum on the unsatisfied principal of a money judgment, with a reduced 5% rate for certain smaller medical and personal-debt judgments entered against individual debtors on or after January 1, 2023.6California Legislative Information. California Code of Civil Procedure 685.010 – Interest on Money Judgments Postjudgment interest is automatic and does not require a separate court order, so once judgment is entered, section 3287 has done its work and the postjudgment scheme carries the balance forward until it is paid.