What Do I Do If My Business Receives a Demand Letter?~4 min read
- If your business receives a demand letter, read it carefully and do not ignore it or respond out of frustration.
- Gather and preserve contracts, emails, invoices, text messages, and other records related to the dispute.
- A demand letter does not necessarily mean you will be sued, and the allegations made in the letter may not be correct.
- Pay attention to any deadline in the letter because it could come from your contract, Texas law, or the sender.
- A business litigation attorney can review the demand letter and your records and help you decide how to respond.
What Is a Demand Letter?
Opening an email or certified letter and finding a demand for money or some other action will get your attention. A demand letter is generally a formal notice stating that another person or business believes you have failed to meet a legal or contractual obligation.
The sender might demand payment of an outstanding debt, performance under a contract, compensation for alleged damages, or that your business stop a particular action or business practice. The letter will usually explain the dispute and give you a deadline to respond or take action.
Do Not Ignore the Letter
A demand letter is not the same thing as a lawsuit, but ignoring one could turn a disagreement into a larger legal dispute. The sender could file a lawsuit if you fail to respond by the stated deadline.
At the same time, receiving a demand letter does not mean the allegations are correct. Before agreeing to pay money or accepting responsibility, you need to understand what the sender is claiming and what evidence supports your position.
Review Your Contracts and Business Records
The next step is to gather the documents related to the dispute. Depending on the situation, this could include contracts, invoices, purchase orders, emails, text messages, account statements, receipts, and records showing when goods or services were provided.
Review your contract carefully. It could contain provisions addressing payment obligations, notice requirements, dispute resolution, attorney’s fees, Mediation, arbitration, or where a lawsuit must be filed. Even emails and text messages could become important when determining what you and the other person agreed to.
Be Careful About What You Say
Your first reaction might be to call the sender or write an immediate response explaining why the allegations are wrong. A quick response made out of frustration could create additional problems.
Statements you make in an email, text message, or letter could later become evidence in litigation. You could unintentionally admit an important fact, make a statement that conflicts with your records, or agree to something before fully understanding the legal consequences. Before responding, consider having a business litigation attorney review the demand letter and the documents related to the dispute.
Does a Demand Letter Mean You Are Going to Court?
Not necessarily. Demand letters are frequently used to try to resolve disputes before someone files a lawsuit. Depending on the circumstances, your response could dispute the claim, provide information the sender did not previously have, propose a settlement, or open negotiations. Resolving the disagreement before litigation could save your business considerable time and expense.
Pay Attention to the Deadline
A demand letter will frequently include a deadline for responding. Do not put the letter aside and plan to deal with it later. Some deadlines come directly from a contract or applicable law, while others are deadlines chosen by the sender. A business litigation attorney can help you understand what the deadline means, whether an immediate response is required, and what steps your business should consider taking.
Contact Springer Lyle Dameron & Harrison
If your business has received a demand letter, Springer Lyle Dameron & Harrison can review the allegations, your contracts, and the available evidence and discuss your options for responding. Contact Aubry Dameron at 940-387-0404 or contact us online to schedule your free consultation.
Springer Lyle Dameron & Harrison is located at 1807 Westminster St., Denton, Texas 76205.
FAQs
Do I have to respond to a demand letter?
The answer depends on the circumstances, the type of claim, and any applicable contractual or legal requirements. Even when a response is not legally required, ignoring a demand letter could increase the likelihood that the sender takes additional legal action.
Should I contact the person who sent the demand letter myself?
You should be cautious about communicating before you understand the claim. Statements made in emails, text messages, or conversations could become relevant later, so discussing the letter with a business litigation attorney before responding is a good precaution.
What if the allegations in the demand letter are false?
Receiving a demand letter does not establish that you did anything wrong. Gather the documents and communications that support your position and have the allegations evaluated before deciding how to respond.
Aubry Dameron
Aubry Dameron is an experienced attorney who focuses on probate litigation, estate planning, business litigation, and criminal and civil appeals. She earned her Juris Doctor, cum laude, from SMU Dedman School of Law and has served as President of the Denton County Bar Association. Aubry is recognized as a Super Lawyers Rising Star and is Top Rated by Super Lawyers.
