Getting a demand letter that claims you breached a contract can be jarring. You work hard to keep your business running, to keep moving forward. Now you have to stop and deal with this threat that could jeopardize everything you have built.
What you do after receiving the demand letter for breach of contract can have a big impact on how the case unfolds. Here are some things to consider:
Check The Validity Of The Demand Letter
There is a specific format a demand letter should follow and specific details that should be included. A poorly written, unclear or nonspecific demand letter may not be valid.
It goes without saying that you should verify that the letter has come from a party you actually have a contract with. Unfortunately, there are fraud attempts that begin with a fraudulent demand letter, so this is something to be watchful for.
Review The Contract
Look closely at the contract that you allegedly breached, as well as all related correspondence. What part of the contract is the other party saying you breached? Is it possible that you did breach the contract? Has the other party misinterpreted the contract or simply accused you of a breach you did not commit? Knowing the exact language of the contract will be invaluable moving forward.
Consider Defenses or Decide If You Want To Cure The Breach
There may be any number of defenses to the breach of contract claim. Perhaps you are being accused of not delivering a product or service that another party was responsible for. Perhaps you did fulfill the contract, and you can prove it. There are also affirmative defenses, which do not argue that you did not breach the contract, but instead argue that there were mitigating circumstances. For example, there was a mistake in the contract, the contract was not legal or the contract did not have a clear time frame.
In some circumstances, you may simply want to agree to cure the breach.
Ultimately, great care should be taken in considering and preparing your response to a breach of contract claim. This may involve getting legal advice from an experienced lawyer. What you do now could have a long-lasting effect on your business.