Contracts are an integral part of our daily lives, encompassing a wide spectrum of agreements ranging from formal written documents to verbal understandings between individuals. In many cases, both parties involved in the agreement have specific obligations that they must fulfill in order to bring the contract to its intended conclusion. However, there are instances when one party fails to uphold their end of the bargain, resulting in a breach of contract. When faced with such a situation, a demand letter can be a powerful tool to assert your rights, communicate your grievances, and seek a resolution.
If you would like to use this letter, this article helps you understand what it is, why you need one, and who can write it. It also provides a guide to writing an effective letter and a sample to help you understand what the letter should look like.
Did you know? According to the American Bar Association, almost two-thirds of attorneys in the United States who handle contractual disputes use demand letters as the first method for resolving these disputes.
What is a Breach Of Contract Demand Letter?
This letter is a formal document notifying the recipient or a party to a contract that they have violated the terms of an agreement. Along with notifying the recipient, it also mentions the specific breach and how it can be remedied. Often, these demand letters outline the initial agreement reached, the failure by the other party, the recommended solution, and the consequence of not responding to it. In addition, the demand provides a timeline for the resolution or performance of the obligations.
The general aim of the letter is to ensure the other party is notified of the breach of contract and the possible legal repercussions. Furthermore, it allows the recipient to resolve the issue amicably before going to court or terminating the contract. If the other party fails to respond and the matter is taken to court, the demand may be evidence that you notified the other party of your intention to sue. It is also proof of goodwill on your end.
Breach of Contract Templates
You can download the following templates for free:
4 Reasons Why You Should Write a Demand Letter for a Breach of Contract
In most cases, demand letters help resolve the dispute without seeking a solution through the courts. They communicate the seriousness of the breach to the recipient, allowing them to assess the best remedy for the situation.
Beyond communication, the letter also serves other purposes, including:
The breach is documented
Often, you need to prove that the recipient has a contractual obligation toward you. Besides the contract, the letter can be used as such proof. You can provide specific details of the original agreement and the obligation the recipient of the letter was supposed to perform. Once you send the letter and it is received, you can keep it as proof of the breach. It can be used as a future reference should you be asked to provide a record of communication between you and the recipient.
Did you know? According to the Annual Report on Class Action Settlements in 2019, 34% of the class action suits filed that year were for breach of contract, making them some of the most frequently filed suits.
Encouraging resolution
The demand letter serves as a formal communication that communicates your willingness to resolve the matter without resorting to litigation or further legal action. It gives the other party an opportunity to rectify the breach and fulfill their obligations, potentially resolving the dispute amicably.
Demonstrates good faith efforts to solve the dispute
Most courts require the person initiating a suit to demonstrate that they tried to solve it out of court first. The easiest way to prove this is by using a demand letter. It shows that the writer was willing to resolve the dispute in good faith, but the recipient did not cooperate.
Motivating action
A formal demand letter often conveys a sense of urgency and seriousness. It lets the other party know that you are prepared to take further action if the breach is not addressed promptly, which can motivate them to prioritize the matter and seek a resolution.
Statistical Insight: A study by Cornell University found that disputes where demand letters were sent as a measure of the first resort, were 30% more likely to be resolved, and took 50%. less time to resolve.
Who Can Write a Demand Letter for a Breach of Contract?
Depending on the circumstances, you may draft and send the letter, but you can also use third parties such as law firms, agencies, and attorneys.
The following are some of the people who can prepare these letters:
Aggrieved party
You can write the demand letter because you are the party who is being affected by the conflict. When writing the letter on your behalf, you will give your contact details so the recipient can contact you if they want to remedy the breach.
Tip: Should you want to prepare the letter yourself, it is advisable to use a template; this will guide you on the general format and language you should use. Further, it helps you understand the information you must include in your letter.
Attorney
Depending on the circumstances, an attorney can also prepare the letter. Lawyers experienced in contract law can provide legal advice, ensure the letter is well-crafted and persuasive, and may have a more authoritative impact on the recipient. The attorney preparing it provides their contact and address information to allow the recipient to reach them to resolve the matter.
A collections agency
In cases where the breach of contract involves a failure to pay for goods or services, the party who is owed may choose to hire a collection agency to write the demand letter. The collection agency communicates the severity of the situation. Further, with an effective letter, the consequences may include collecting and selling the party’s goods to recover the cost of your goods or services. In this case, the collection agency will provide their contact information, and most communication may be done through the agency.
How to Write a Demand Letter for Breach of Contract: Step-by-Step Guide
Beyond the standard information in any letter, the demand must be specific to the breach and provide a consequence for non-compliance. The guide below can help you write an effective letter:
Step 1: Begin with an introduction
The first step is introducing yourself. Your introduction should include your name and why you are writing the letter. In some cases, you may state the demand as your subject. You can also simply request a specific amount of money or the return of goods. Whatever your reason is, it should be made clear at the beginning of your letter.
Step 2: Describe the breach of contract
The second step is to describe exactly what part of the contract the other party broke. This best applies to written contracts. You can cite the provision directly or paraphrase it. Regardless of how you decide to mention it, it should explain the laws and agreements the other party has failed to comply with despite your agreement.
Step 3: State the remedies you are seeking
Once you state the issues, you can state the solutions or steps you expect the recipient to take. You may give multiple solutions as long as they are viable and satisfactory for achieving the desired result. If you expect the return of goods, include the exact goods you want to be returned. If you expect money, provide a particular amount you can account for should the recipient want further information.
Step 4: Provide evidence
To reduce doubt and the recipient’s likelihood of denying the facts alleged in the letter, you may attach any supporting documents, such as photocopies and scans of receipts, documents, and previous communications. Referring to the contract and previous communication solidifies your claim against the other party.
Step 5: Set a deadline for compliance
You must provide a time frame for the other party to respond in order for your letter to be effective. This deadline should provide them with sufficient time to review and respond to the letter but also indicate that the matter should be addressed promptly. The usual range is often seven to fourteen days.
Step 6: Close the letter
Once you have provided all the necessary information, you may conclude your letter by identifying the consequences of not complying with the conditions mentioned in the previous paragraphs. It is important to outline the legal repercussions and steps you will take, as it helps the other party understand the seriousness of the situation.
Step 7: Sign your letter
After the conclusion, you must sign your letter; the most preferred is a handwritten signature. You can sign off like any other letter with a formal salutation such as “yours faithfully” or “sincerely”. Ensure that you include your full name after your signature.
Tip: Consider using a pre-made template to write a demand letter. In addition to simplifying the process, templates can help you save time because you simply add important information, save your letter, and send it. They allow you to spend more time on the content than the format. They also help you understand the information you should include in your demand letters, such as names, contacts, and dates.
Sample Letter
Mary Montgomery,
654 Woodley Avenue
Woodley, MS 08832
February 15, 2022
Re: Breach of Photography Services Contract
Dear Ms. Montgomery,
Pursuant to the contract titled ‘Photography Services Contract’ dated January 15, 2022, you have been found in breach of the terms of the contract for the following actions:
Failing to deliver photographs at the agreed date January 30, 2022.
Delivering photographs of lower quality than the agreed-upon standards stipulated in Clause 2.1 of the Contract.
Failing to take videos of the events as Clause 3 of the contract stipulates.
For the above breaches, I am formally requesting that you provide better versions of photographs, properly edited as per the contract. In addition, as stated in Clause 5.0 of the contract, I demand a refund of half the payment, or $150, for the unsatisfactory services. If you do not satisfy the above requirements within seven days of the date of this letter, I will have no option but to file this matter in small claims court.
Please contact me at 555-5463 for any clarifications. Your prompt response will be appreciated.
Sincerely,
Beverly Meads
How to Send a Demand Letter
You can send your letter via mail or email. If your recipient is an individual, it is best to send the letter via certified mail so you can have proof that they have received it. While the same applies to businesses, you can also use courier services or deliver by hand. Whatever method you use, there should be proof of service and receipt of the letter.
Maintain a record of the date and time you sent the demand letter. If using certified mail or email, keep the delivery receipts or read receipts as proof of delivery. This documentation is important if the matter progresses further. However, signature requests are best used when sending mail to businesses rather than individuals at their home addresses. You should also keep a copy of the letter in case you need it for future reference.
Conclusion
While there are other methods you can use to pursue a party for breach of contract, you are encouraged to consider sending them a letter. It is simpler to write and may help resolve the issue without the expensive cost of litigation. You may hire an attorney to draft it or write the letter yourself. If you choose to use a demand letter, you need to be clear from the beginning by expressing your intent, mentioning the breach, and providing a deadline to respond.