San Jose Business Lawyers Blog
Business disputes arise for many reasons. For example, a vendor might have a unpaid invoice that is several months overdue. Or an insurance company may refuse to pay on a claim after your factory suffered fire damage. Or perhaps you recently had a fallout with a partner and have been going back-and-forth on how to separate them from the business.
At a certain point in the process, you may need to send a formal document known as a demand letter to try and break the logjam. Conversely, another party may send you a demand letter. In either case, it is always best to work with an experienced California business litigation attorney who can advise you of your rights and responsibilities when it comes to demand letters. The team at Structure Law Group assists many California businesses in this area, and we can put that expertise to work for you.
How a Demand Letter Works
A demand letter is what it sounds like. The sender believes they have a legitimate grievance against the recipient. So they send a written notice demanding the recipient make restitution for that grievance.
Typically, a demand letter is not the first step in trying to resolve the sender’s grievance. There is often an extensive back-and-forth between the parties. The sender will try to call the recipient informally to discuss the matter. And even after sending a demand letter, that does not necessarily mean that litigation is imminent. In many cases, the demand letter is simply a more formal reminder to the recipient that there is a dispute and the sender seeks restitution.
While there is no single approach to creating and sending a demand letter, some common practices include:
- sending the letter by certified mail, to ensure there is proof of receipt;
- making it clear in the letter that this is a “final chance” for the recipient to resolve the matter without litigation or some other form of dispute resolution such as arbitration;
- providing the specific type of relief sought and a deadline to comply.
When Would You Send (or Receive) a Demand Letter?
The most common case for sending a demand letter is when you believe someone else owes you money. This can be a customer, client, or contractor who has not paid you. Or it might be someone you loaned money to on credit.
Another common demand letter scenario involves insurance settlements. If your insurance company is not meeting its obligations under your policy, you can send a demand letter insisting on payment for the full insured value of your claim. Such demand letters often include language stating that failure to comply may lead to a lawsuit alleging bad faith and unfair dealing.
Finally, demand letters may even involve participants in the same business. If a partner in a business has a grievance with the other partners, they may send a demand letter demanding some form of restitution for a breach of the partnership agreement or other contract.
Contact a California Business Litigation Attorney
If you are thinking about sending a demand letter–or you have already received one from someone else–it is important to speak with an experienced California business litigation attorney about your next steps. The team at SLG can review your situation and advise you on an appropriate course of action. Contact us online today or call us at 408-441-7500 to schedule a consultation.