A breach of contract letter is used when two or more parties agree, and one either Party fails to fulfill the terms of the agreement. Not only is a breach of the Contract illegal but also a show of unprofessional. The afflicted party can take legal actions against the Party in violation of the agreement.
A breach of a contract demand letter is usually sent as a final reminder before taking any legal action. It sets out a legitimate claim to the Party in violation. Also, it states your rights and a demand for compensation, refund, or performance of an obligation.
Notice of Breach: What to Include
A breach of contract demand letter needs to explain the nature of the violation and clearly state what is to be done. It should clearly explain the quality of the breach, saying what requirements of the Contract have not been fulfilled. The clause breached should be quoted, along with an explanation of how it has been violated.
Consider the following when drafting a Breach of Contract Demand Letter:
- Most Contracts have a provision that defines how a breach of Contract should be notified to the breaching Party. For instance, one may be required to send the notice via fax, email, or registered mail. You must always use the methods stipulated in the Contract; otherwise, the letter might be considered not an official notice of the breach.
- The letter must be addressed to the Party that signed the agreement and should follow the proper channel.
- You must include the dates. It is imperative to create a record of the Date when the breaching Party was officially informed of the breach. This will come in handy should the case end up in court.
- Describe the nature of the breach. The letter should clearly describe which part of the contract was breached. These can either be:
- The other party failed to perform. For instance; the other Party may fail to pay up or fail to deliver the goods promised
- The other Party has made it difficult for you to perform your duties, for example, you were hired to modify a web application, but the organization that hired you won’t give you the code you need to do the work.
- The other party has made it clear that they shall not be able to perform their duties in the future as enshrined in the agreement.
- The demand letter should propose a solution to the breach. If it is too late for the other Party to desist from violating the agreement, then the letter will serve the purpose of canceling and seeking damages.
- Even though a Breach of Contact Demand Letter is not an official letter when writing, you should maintain professionalism and not use angry or insulting language as the letter may later be used in the court.
Remedies for Breach of Contract
Before you decide on sending a Breach of Contract Demand Letter, you should always try other methods like discussing with the other Party in a bid to solve the problem. This will help you avoid escalating the situation to a level of conflict.
There are different remedies provided by the law for a breach of contract. These remedies depend upon the nature of the Contract and the nature of the violation. There are five remedies for a breach of contract they include:
- Rescission and reformation: This remedy is used when parties agree to enter into a contract mistakenly, fraudulently, or due to influence and coercion. If the court concludes that there has been a material breach of contract or an offense serious enough to defeat the primary purpose of the Contract, then the court will approve termination of the Contract
- Compensatory Damages: These are divided into two categories, i.e., General and Special damages. General damages are awarded to cover the losses connected to the breach of contract directly. In contrast, Special damages are awarded to cover any losses incurred by the non-breaching party.
- Restitution: Damages may be available for a breach that is considered nonmaterial or partial; this means that the Party that has suffered the violation has experienced some degree of financial damage but not to the extent that the primary purpose of the contract was destroyed. Restitution is meant to restore the injured Party to the position occupied before the breach.
- Specific performance: under particular performance, the party in breach of the contract has to perform its duties as specified in the contract. Specific performance is customarily used when money damages are not suitable to compensate the plaintiff.
- Money damages: refers to the monetary payments paid by the breaching party for violating the terms of the contract. Subject to the nature of the breach, the court may rule that the plaintiff be rewarded the full or partial amount that they would have otherwise have received had the contract gone to completion. There are two types of money damages i.e.
- Compensatory damages: This is the amount of money paid by the breaching Party to cover the loss incurred by the other party due to the breach of contract.
- Punitive Damages: punitive damages, unlike compensatory damages, are rewarded for punishing the party in breach of the contract to deter them from committing similar acts.
Sending the Letter of Demand
Most Contracts have a provision that defines how a breach of Contract should be notified to the breaching Party. For instance, one may be required to send the notice via fax, email, or a registered mail. You must always use the methods stipulated in the Contract; otherwise, the letter might be considered not an official notice of the breach.
Whether the other Party responds to your letter or not is out of your control. Therefore you must include in the letter the next step you will take should they fail to comply with the demands made in the letter.
The Response to a Notice of Breach
After sending the letter, the receiving party may decide to respond in the following ways:
- Let’s talk: if the party in breach of the contract invites you to discuss the matter, seek advice from your attorney before engaging in talks with them.
- Get Lost: the receiving party after reviewing your letter may find that they are not actually in breach of the contract. They may respond to your letter by stating that they have reviewed your letter and have determined that they are not in violation of the agreement. In this case, it is advisable to seek the help of your attorney before making another move.
- No response: the party in breach of the contract may decide not to reply to your letter or may not have seen your letter. If you don’t get a response letter in two weeks, then sending a second letter would harm. If you still don’t get a response, then you should contact your attorney before escalating the matter.
Breach of Contract Demand Letter Templates
- MS Word
Frequently Asked Questions
You had better send a breach of contract demand letter if you signed a contract and the other party in the agreement has failed to uphold the terms and conditions set in the contract, and you have unfruitfully failed in trying to resolve the matter.
This letter serves as a warning to the party in breach that should they fail to adhere to its demands, then legal actions may be taken against them. The letter notifies the other party that they have breached the contract, which they might have otherwise not known they had.
The letter of demand should be simple, clear, and direct to the point. Include the details of the contract, how the party has breached the agreement, and what they must do to fix the breach, and what will happen should they fail to correct the violation.