How To Draft A Breach of Contract Letter: 7 Step Protocol Guide

Breach of Contract Defined

At its core, a breach of contract is an action or the failure to take action that is contrary to the standards set forth in the agreement, and this is the point at which the breach of contract letter comes in. Legalese aside, what this means is that the other party hasn’t held up its end of the bargain. If A is supposed to do x and B is supposed to do y, and either one doesn’t, then there is a breach of the contract. Breaches can occur in a number of ways and for a number of reasons.
Not surprisingly, a breach of contract can be both minor and/or major or partial. The legal term for a minor breach is "partial breach." This means that the contract was broken, but not to the extent that the breach denies the other party the benefit of the agreement. Minor breaches are far more common than major breaches, which is what most people think of when it comes to a breach of contract.
Minor breaches do not require that the non-breaching party walk away from the contract entirely. They can, instead, choose to enforce the terms of the contract that have not been breached. For example , someone who is waiting for shipment of an item may get it a day late. As this is a minor breach, the person would still receive the package (of course), but would be able to sue the other party, if he so chooses. However, he could also decide to soldier on with the contract and move on with his life.
On the flip side of that, we have a material breach or a total breach, which means that either the contract has not been fulfilled by the other party, or that he simply failed to perform what he was supposed to do under the terms of the contract. In this case, the contract cannot be operated any longer and the parties need to go their separate ways. With a contractor who has failed to complete a job on time or has installed a new roof but left the shingles hanging off the edge, for instance, this may be the case.
Deciding between sending a breach of contract letter versus suing someone can be a tough choice, but sending the letter is often a good place to start, as it allows the other person a chance to make things right (or to at least make partial amends), and saves everyone time and money that can be spent better elsewhere.

Why a Breach of Contract Letter is Important

There’s a good reason for documenting a business breach with a letter. The specific details the letter describes can play a critical role in the company’s efforts to rectify the situation or defend itself when legal proceedings become necessary.
The facts and circumstances that the letter document can support the validity of the aggrieved party’s demands during negotiations toward the settlement of the issue. If a lawsuit becomes necessary, the language the letter contains can serve as valuable evidence.
The aggrieved party can protect its interests through documentation that provides the facts and circumstances of a business contract breach rather than by assuming that a verbal recitation of those details will suffice. Such documentation also has the potential to prevent a small business dispute from escalating into a costly lawsuit.
The breach of contract letter protects the aggrieved party by specifying the conditions of the business contract at issue and the actual events and conditions of what happened. The absence of a letter provides the other party with deficiencies in documenting the contract and the breach that can keep the matter out of the courts.

Elements of Breach of Contract Letter

When you write a demand letter, you need to include certain elements, so a plaintiff lawyer can make use of it. In addition to naming the parties, the letter should contain six specific categories of information.

The facts surrounding the breach. This is similar to our first rule about dates or times and locations. Be as specific as possible. People forget times and dates. What was the date you told them they were in breach? What was the date you gave them the opportunity to cure? If they never had one, put that in your letter and explain that you are not giving them an opportunity to cure. If you want them to have an opportunity to cure, be specific about the date you require them to cure by and what it is they’re supposed to cure.
The alleged breach. Be specific here. Give facts to support the allegation that they’re in breach of contract. If you think they breached the covenant of good faith and fair dealing, then say exactly how you think they breached that covenant. Give examples. If you’re not sure what that means, look it up. You don’t have to know all the legal terms, I just recommend that you look them up so you’re on the same page and you don’t confuse medical doctors and doctors of jurisprudence. That causes problems.
Cite to the contract. This may seem like it needs no explanation, but it does. Sometimes people think that when they breach of contract they have to do with something in the contract. That’s not always true in California.
Current status: Where we are now. Have you been able to resolve this matter? Do you need to go to small claims court? Have you filed an Arbitration demand? Are you suing or sending it to an attorney? That’s where we are now. Tell them that.
Demand for money or specific action to be taken. What is it that you want that will make it right? Do you want your money back. Do you want them to do the work? Do you want them to pay the cost for this to be fixed? Tell them. It really is amazing how often we see demand letters to home improvement contractors where people ask for a huge sum of money or money in general but they don’t ask for anything to be done to fix the problem.
A date by which the issues must be resolved. We’ll call this the "drop dead date." If you ever watched Gary Unmarried, you’ll know what we’re talking about. The drop dead date is really important because if you don’t put a drop dead date in there, you’re allowing them to remedy the situation forever.

In most cases, just about every home improvement contractor I’ve ever encountered, if you give them a chance to fix the problem, they will. They want to keep doing work in the area. They don’t want to get bad reviews and who wants to have a bad name in the industry they’re in? No one. So be reasonable and give them a chance to fix it. If they don’t fix it and you end up going on Yelp, well, you have at least given that contractor the maximum opportunity to go ahead and fix it and make it right at their own cost, right? Because that’s what you really want. You’re not just mad. You want it fixed and you want it done now at their cost.
It’s a good idea to look at your demand letter as an opportunity. You know the contractor is going to get it. They’re going to read it. If they have to get an attorney to figure out what you’re saying to them then chances are they’ll take it seriously. Don’t think of your demand letter as junk mail. Take it seriously and you’re more likely to have the outcome that you want.

How to Draft a Breach of Contract Letter

The next step in writing the letter is to draft it so that it is an effective communication and so that the issues are described and the breach of agreement is established. I recommend keeping the letter to one page.
It should include:

A statement that you expect the other side to comply with the terms of the contract.
Outline of the issues and requirements of the contract.
A clear requirement or request for the terms of the agreement to be performed, spelled out without ambiguity.
Allow a specific amount of time for the issues to be resolved.
If the other party does not comply, state that there will be consequences (i.e., you will move forward with litigation, seek damages, seek rejection of proposal , etc.) at the end of the timeline.

An example of a written letter may look like this:
Dear Defendant: I represent my Client, XYZ Company. My Client entered into a written contract for You to provide a service/product. In a letter dated October 3, 2013 and sent via email on that date, my Client notified You of Your breach of contract with them. As of today’s date You have not issued a refund to my Client and instead are refusing to refund the funds to them. Please send a request for refund to my Client by October 30, 2013 by email to my Client’s email address.
If the above is not complied with by October 30, 2013, my Client will take all legal actions necessary to recover the funds. Thank You.

Breach of Contract Demand Letter Example

To: [ENTER THE NAME AND ADDRESS OF THE PARTY IN BREACH]
FROM: [ENTER YOUR NAME AND ADDRESS]
[Today’s DATE]
Subject: Breach of Contract
Dear [Name of person violating the contract],
I am writing you regarding the contract, dated [DATE] for [DESCRIBE THE SUBJECT MATTER OF CONTRACT] you entered into with me on [DATE].
This correspondence is to inform you that your actions have subsequently caused a material breach of our contract. [EXPLAIN HOW THE CONTRACT WAS VIOLATED].
Please be advised that I am not interested in continuing any part of our contract due to the fact that [EXPLAIN THE REASON FOR CANCELLING THE CONTRACT].
[If you are seeking damages you can write something like this: I am giving you notice that I have incurred expenses related to this breach and expect compensation for my damages which total $AMOUNT. I request that you forward compensation for this amount to me within ten (10) days.]
I am hopeful we can resolve this matter quickly and amicably, however I will seek legal counsel if I do not hear from you within the next [NUMBER OF DAYS] days.
Regards,
[YOUR SIGNATURE]

Legal Issues and Next Steps

In some cases, the contract may allow for an extended settlement period before legal action can be taken. Or it may be that although the breach clearly entitles you to take action, the cost of pursuing a claim is simply not worth the anticipated result. Weighing your options is essential, and careful thought should be taken. If the contract termination clause states that a failure to meet the contract terms gives you the right to terminate without notice, you should do so and take immediate action to limit your loss. You may even want to consider seeking urgent interim injunctive relief from the Court, if that seems appropriate. Even if the contract gives the other party a set amount of time to rectify the breach before being in breach of the contract, you must weigh the pros and cons of obtaining legal representation. The first step taken after initiating communication with the other party regarding their breach is often a written notice of alleged breach, which adds formality to the matter . Whether or not you need to commence proceedings often depends upon the size and scale of the contract between the parties. Note, however, that good faith obligations are increasingly imposed by courts on parties in contractual relationships. This is based on the notion that society as a whole would benefit from a fair and reasonable approach to contract law, irrespective of strict legal principles. Courts will try to enforce these general principles of fairness on parties to contracts, so that they are neither harsh nor oppressive.
Specific factors to consider are: Make sure you document all correspondence regarding the breach, including the original contract, the termination letter, the breach letter, and the response received from the other party. If you and your legal representative decide to continue the matter, appropriate issued court forms will need to be filed, including a statement of claim, along with supporting affidavits. The processes for doing so vary according to jurisdiction, and a legal practitioner is best placed to advise you on your specific circumstances.