What to do when you receive a demand letter

What to do when you receive a demand letter

What to do when you receive a demand letter

You received a Demand Letter and Now What?

Sometimes, deals do not work out as planned. If you are a Texas business, you may be on the receiving end of an allegation that you have breached a contract. These days, we see allegations first come up in text message exchanges or emails and only when those issues are not resolved do we see an attorney write a demand letter or contact the alleged breaching party. Regardless of whether you hire an attorney, there are a few things to know and do when you receive a demand letter.

Examples of a breach of contract

For an example, let’s think of the construction industry, such as in a buildout of a bar or restaurant. The new business owner acquires a commercial lease, signs and takes possession of the building, and makes plans to buildout the interior for the new bar or restaurant. The owner will then hire a contractor to perform the work, and sometimes this can involve multiple contractors. In this context, a common example of a breach of contract is when the contractor or subcontractor fails to do the work on time at the agreed deadlines or even fails to do the work at all. Or, even when the work is performed it is not of the quality expected or didn’t use the correct materials. On the flip side, the contractor may do perfect work to the specifications and terms requires and then the owner fails to pay the bill in full and on time, or in accordance with the draw schedule. This inevitably leads to the parties exchanging allegations of who breached first and who is responsible.

How to Respond to a Notice of Breach of Contract or a Demand Letter

If you receive a notice of breach of contract or a demand letter, the first thing you should do is save the communications between you and the other party. If it is a letter, scan it and save it, and if it is a text message or email, make a printout (or screenshot at the very least). You don’t want to end up deleting an important piece of evidence. For example, maybe the contractor emails you and says he can’t complete the work unless you pay more than the estimate requires and this is because he mistakenly underquoted the work and materials. It could very well be that this story changes as time goes by and you’ll want to have a clear record of what was said before attorneys were involved. Remember that everything you can say will likely be used against you if the dispute escalates to a lawsuit.

Review the Contract Terms and Compare to the Allegations

If someone is saying you breached a contract, it goes without saying that you’ve got to review the contract terms word for word to see whether there is any truth to the claim there was a failure to carry out the terms. At this point, if there is a good amount of money at risk, then it is in your best interest to contact a Texas business attorney that can review the contract and the communications between you and the other party. Even from a short consultation, you can decide the best plan and strategy to respond to the other side. It is important to note that when a deal starts to fall apart, this is the time to be proactive and get your attorney involved so that you can be careful and let the other party make the mistakes while you set up your defenses and prepare a winning strategy to handle the problem in the most efficient and cost effective way possible.

Call Sutherland today to talk about your options.

If you have been accused of breach of contract and live or work in the greater Houston or Austin areas, or anywhere in Texas, we can help you weigh your options when you have received a demand letter. Contact us today at 713-300-1946 or email tim@businesslegaltx.com