How to Handle Demand Letters for Breach of Contract

There’s a right way and a wrong way to send and respond to a breach of contract demand letter.  Whether it’s a cease and desist letter or a demand for damages, you can easily make mistakes that could put you or your small business at a disadvantage for mediation, arbitration, lawsuit, or settlement.  If you receive a cease and desist or demand letter, or if you’re sending a breach of contract demand letter, keep these tips in mind:

1.  Pause and resist your urge to act or react when you’re feeling emotionally charged.  Understandably, many people who receive a demand letter have very strong reactions, and some feel moved to react immediately with a hostile or defensive phone call, email, or letter.  Resist this urge.  Similarly, if someone has violated your rights through breach of contract, tortious interference, or other acts, don’t send hasty and hostile demand letters or emails.  Such communications can often make a bad situation worse because you may (accidentally) make false representations, you may escalate the conflict, or you might make unwise claims or threats.  In the heat of a dispute, it’s not uncommon for an individual to unwittingly make threats that constitute criminal extortion.  It’s much more prudent to discuss your case with an attorney to fully understand your rights, liabilities, and practical issues specific to your business dispute.

2.  Gather all relevant documents.  You should collect and organize any and all contracts or documentation that is relevant to your agreement.  Emails should also be collected as they may form part of the agreement you have with the other party.  Review all of these documents and use the information therein to write a timeline that describes the course of events and the alleged contractual breaches along the way.  You’ll probably discover things that you forgot about or hadn’t considered.  It’s also important to look at the situation from the viewpoint of the other party and to think critically about the potential claims or counter-claims they may have against you.

3.  Determine the strength of your case and choose a legal strategy.  After you have assembled your documents and have thought critically about your opponent’s perspective, discuss your case with a Texas business lawyer.  An experienced attorney can provide invaluable advice and give you a realistic opinion on the strength of your case.  In some cases, you may not know about additional rights or breach of contract defenses available to you; in other cases, you may overestimate the strength of your case, your defense, or your likelihood of succeeding in trial or collecting damages after judgment.

Successful business dispute resolution typically requires us to overcome the feelings of disappointment, betrayal, anger, or deceit that often come hand-in-hand with breach of contract.  You should do your best to focus on practical and cost-effective solutions.  With the documentation you gather and advice from an attorney, you’ll be informed and prepared to choose your course of legal action.  You’ll also have a more objective perspective of the situation and enough “cooling off” time to make wise decisions.

Disclaimer: This article is not legal advice and does not create an attorney client relationship.  To reach the attorney responsible for this article please contact James Blake, The Blake Law Firm PLLC, 9442 N. Capital of Texas Hwy, Arboretum Plaza One Ste 500-181, Austin, Texas 78759. (512) 651-3930.

  • Posted Monday, November 5, 2012 at 4:26 pm CST in Content Type, Featured, Legal |  Comment (RSS)
    James Blake

    The Blake Law Firm, PLLC.: http://www.TheBlakeFirm.com
    Contact James Blake

    James Blake is a growth-oriented business attorney who strives to be a creative business partner, to identify value-add opportunities, and to crystallize the relationships, structures, and processes that will drive your commercial success. James Blake practices law in Texas and Hawaii, and has protected the interests of businesses across a broad range of industries, including technology, construction, service and retail, food and beverage, franchisors and franchisees, product manufacturers, and investors.

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