Legal Question in Business Law in California

Hurry up and sue them before their license is reinstated, they won't be able to defend.

A suspended corporation can't so anything in court, but all they have to do is reinstate and then fight the lawsuit. If serious about hiring counsel to help in this, feel free to contact me.

First, I assume from the context that the "license" that is suspended is the corporation's powers, rights and privileges under its corporate franchise granted by the Secretary of State.

A contract with a suspended corporation is not void; it is merely "voidable." In order to turn the voidable contract, which must be honored by both parties, into a void contract, which is a complete nullity, the non-suspended party to the contract must go to court with a lawsuit to rescind the voidable contract. See Revenue & Taxation Code section 23304.5. One of the conditions of rescission is that the rescinding party must restore to the suspended corporation any benefits it has received so far under the contract terms. The suspended corporation will be given a reasonable time to cure the voidability. Rev. & Tax. Code 23305.1(a). If the suspended corporation complies with all of the reinstatement requirements, any voidable contracts not already voided by court order will be enforceable. Rev. & Tax. Code 23305.1(c).

One does not normally sue for fraud in a suspended corporation matter. If the conditions of fraud are met, a cause of action for fraud may be appropriate. Merely being suspended is not fraud, however.

I guess the bottom line is that acting against a suspended corporation may be worth while if it is really necessary to get out of the contract, but it isn't super simple or cheap.