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 to write a demand letter that gets results can make all the difference in your case.
This blog post will discuss everything you need about demand letters for breach of contract. We will cover what should be included in the letter and some tips on ensuring 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 acts as an ultimatum and pressures the breaching party to resolve the issue.
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!
Common Types of Breach of Contract Demand Letters
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You let someone borrow money and were not repaid as expected.
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You paid for a product, but it does not work, or it was never received.
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You sold a product but did not get paid.
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You completed a service or did work but did not get paid.
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You paid for a service, but it was not completed.
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The other party did not pay housing rent payments in full.
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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:
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Details of the breach – including specific dates and details of how the breaching party failed to fulfill their obligations.
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Amounts owed – include any costs incurred because of the breach, such as lawyer’s fees or other expenses.
Check out 10 Steps to a Strong Demand Letter for an in-depth walk-through.
How to Send the Demand Letter
Usually, the demand letter should be served through registered mail or in person. To see more options, read 5 Ways to Send a Demand Letter.
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If it is mailed, you must provide proof of delivery and have your signature notarized.
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A witness should be present if served in person 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.
FAQ
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:
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They may acknowledge the breach and agree to take corrective action.
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They may accept responsibility for the breach and pay you as requested.
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They might offer a settlement or payment plan as an alternative solution. In some cases, negotiation may be necessary to reach an agreement.
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They may contest the demand letter, claiming the breach occurred differently than you described.
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They may contest the demand letter, claiming that no breach has occurred.
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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. It is best to act promptly once a breach has been discovered to ensure all legal recourse remains available. For more information, refer to Suing within the Statute of Limitation.
When Should You Consider Hiring an Attorney?
An attorney is recommended when:
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The case involves complex issues
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The case involves large sums of money that exceed the limit for Small Claims for the corresponding area/state.
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You’d like your case presentation to be reviewed by a professional before going to court. You can often pay for this service alone and nothing else.
Before 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?
