Demand Letters for Breach of Contract
Updated: Dec 20, 2022
When you are involved in a breach of contract case, the first step is often to send a demand letter. Demand letters formally notify the other party that they have violated the terms of the agreement, and it is also your opportunity to start negotiations. Learning how to write a demand letter that gets results can make all the difference in your case.
In this blog post, we will discuss everything you need to know about demand letters for breach of contract. We will cover what should be included in the letter and some tips on how to ensure it is effective. So, if you are gearing up for a breach of contract lawsuit, keep reading for everything you need to know about writing a winning demand letter.
What is a breach of contract?
A breach of contract occurs when one or both parties fail to fulfill the terms and conditions of a contract (even an informal verbal agreement is a contract). A breach can be either material or non-material, depending on the seriousness of the breach. Material breaches occur when an essential part of the agreement is not fulfilled, while non-material breaches are less serious and involve minor violations.
What is a demand letter or a letter demanding payment?
A demand letter or a letter demanding payment is a formal notice sent to the party responsible for the breach of contract. It outlines the details of the breach and informs them that if they fail to take corrective action, legal action may be taken against them. A demand letter serves as an ultimatum and puts pressure on the breaching party to resolve the issue at hand.
Common Types of Breach of Contract Demand Letters
You let someone borrow money and were not repaid as expected.
You paid for a product, but it does not work, or it was never received.
You sold a product but did not get paid.
You completed a service or did work but did not get paid.
You paid for a service, but it was not completed.
The other party did not pay housing rent payments in full.
The property owner did not return the security deposit as expected.
How to Write a Breach of Contract Demand Letter
To be effective, a demand letter should include the following information:
Details of the breach – including specific dates and details of how the breaching party failed to fulfill their obligations.
Amounts owed – include any costs that have been incurred because of the breach such as lawyer's fees or other expenses.
For an in-depth walk-through, check out 10 Steps to a Strong Demand Letter.
How to Send the Demand Letter
In most cases, the demand letter should be served either through registered mail or in person. To see more options, read 5 Ways to Send a Demand Letter.
If it is sent by mail, you will need to provide proof of delivery and have your signature notarized.
If served in person, a witness should be present to verify that the letter was delivered properly.
Once the demand letter has been served, the breaching party has a certain amount of time to respond, usually 30-60 days.
Is a Demand Letter Serious?
A demand letter shows that an individual or entity is serious about resolving a particular issue or dispute. They are likely preparing themselves for legal action if the demand letter is ignored.
What Responses Can There Be to a Breach of Contract Demand Letter?
The breaching party may respond in several ways:
They may acknowledge the breach and agree to take corrective action.
They may accept responsibility for the breach and pay you as requested.
They might offer a settlement or payment plan as an alternative solution. In some cases, negotiation may be necessary to reach an agreement.
They may contest the demand letter, claiming the breach occurred differently than what you described.
They may contest the demand letter, claiming that no breach has occurred.
They may not respond.
When is Legal Action Necessary?
Legal action may be necessary if the breaching party fails to respond or rejects the demands outlined in the demand letter. If you have suffered significant financial damage, it may be worth considering taking the other party to small claims court where you can represent yourself without a lawyer. To help weigh the pros and cons of suing someone in your situation, check out JusticeDirect.com.
What is the Statute of Limitations on Breach of Contract Claims?
The statute of limitations on breach of contract claims varies by state but is generally two to four years (depending on whether the agreement was made verbally or written down). It is important to note that the statute begins when the breach occurs, not when you become aware of it. To ensure all legal recourse remains available, it is best to act promptly once a breach has been discovered. For more information, you can refer to Suing within the Statute of Limitation.
When Should You Consider Hiring an Attorney?
An attorney is recommended when:
The case involves complex issues
The case involves large sums of money, that exceeds the limit for Small Claims for the corresponding area/state.
You’d like your case presentation is to be reviewed by a professional before going to court. You can often pay for this service alone and nothing else.
Before looking into hiring an attorney (who may charge up to $500 for a demand letter), explore free/low-cost alternatives like JusticeDirect.com.
Is a Breach of Contract a Tort?
The short answer is: not necessarily. To understand more about the relationship between a tort and a breach of contract, check out Is a Breach of Contract a Tort?
Demand letters are often effective in getting what they want without going to court. Sometimes a demand letter is also required before you file a case in small claims court. Get started on your professional demand letter now!
NEED HELP WITH YOUR JUSTICE JOURNEY?
The quest for justice is never easy, particularly when it comes to getting your money back. However, thanks to advances in technology, it has become easier. Quest for Justice’s first app, JusticeDirect, is the only app of its kind designed to support people without lawyers resolve their dispute and get their money back, both in and out of court. The first step to getting money back is through a letter demanding payment from the other party JusticeDirect offers customizable demand letters for free. If the letter demanding payment does not work, then the next step is taking them to court. JusticeDirect* will guide users every step of the way through the small claims court process by helping them:
Understand the legal process;
Evaluate the pros and cons that come with taking someone to court;
Generate small claims court forms; and,
Avoid common mistakes when filing your forms and serving notice on the other side.
*Currently, JusticeDirect can only help litigants sue in California’s small claims court.