When a Demand Letter Starts the Clock: Statutes of Limitation, Cure Periods, and Notice Requirements
Business owners and entrepreneurs consistently misunderstand one of the most fundamental timing issues in contract disputes: when does the clock actually start ticking? I’ve watched countless clients lose viable claims because they confused three entirely different legal timeframes, and I’ve seen others rush into premature litigation because they didn’t understand which deadline actually mattered.
The confusion is understandable. When your payment processor freezes $50,000 in your account, or your contractor abandons a half-finished renovation, or your SaaS vendor suddenly terminates your service, the natural instinct is to fire off a demand letter and assume that’s when the legal clock begins. But the reality is far more nuanced, and getting these timelines wrong can mean the difference between a recoverable claim and a permanently lost right.
This article breaks down the three distinct “clocks” that govern contract disputes, explains when each one starts running, and provides practical guidance on how to structure demand letters to preserve your rights under all three frameworks simultaneously.
The Three Clocks That Control Contract Disputes
Before we dive into the mechanics of demand letters, you need to understand that three fundamentally different timing mechanisms can govern any contract dispute. Each operates independently, serves a different purpose, and has different triggering events.
Statutes of Limitation: The Absolute Deadline
Statutes of limitation are statutory deadlines for filing lawsuits. These are absolute bars set by state legislatures. If you don’t file your complaint in court before the statute of limitation expires, your claim is permanently barred, no matter how meritorious it might be.
For written contract claims, these deadlines vary dramatically by state. California gives you four years from the breach. Florida gives you five. New York gives you six. Illinois and Louisiana give you ten. The variation is substantial, and choice-of-law provisions in your contract matter enormously.
The critical point about statutes of limitation: in most jurisdictions, for most contract claims, the clock starts running when the breach occurs, not when you discover it, not when you send a demand letter, and not when you decide to do something about it. This is the default rule that catches most business owners off guard.
Contractual Notice-and-Cure Periods: Private Deadlines
Many sophisticated commercial contracts contain notice-and-cure provisions. These are contractual requirements that you provide written notice of an alleged breach and give the other party a specified period (commonly 15 to 60 days) to cure the breach before you can terminate the agreement or file suit.
These provisions create a private timing framework that operates entirely independently from statutes of limitation. A typical clause reads something like: “No action for breach may be commenced unless the non-breaching party has provided written notice describing the breach with reasonable specificity and has allowed the breaching party thirty days to cure.”
Courts routinely treat strict compliance with notice-and-cure clauses as a condition precedent to bringing suit. If your contract has one of these provisions and you file suit without first sending proper notice and waiting out the cure period, expect a motion to dismiss or a stay while you complete the contractual prerequisites.
The clock on a contractual cure period starts when you send the compliant notice letter. This is genuinely a situation where your demand letter starts a clock, but it’s starting a contractual clock, not the statute of limitation clock.
Statutory Pre-Suit Notice Requirements: Special Regimes
Certain types of claims, particularly consumer protection claims and construction defect claims, are subject to special statutory notice requirements that exist separately from both general statutes of limitation and private contractual cure periods.
California’s Consumer Legal Remedies Act requires 30 days’ pre-suit notice before you can file for damages. Texas’s Deceptive Trade Practices Act requires 60 days. Many states have construction “right-to-repair” statutes requiring detailed pre-suit notice and an opportunity for inspection and repair before a homeowner can sue a contractor for defects.
These statutory notice requirements create yet another timing framework. The demand letter you send to satisfy a statutory notice requirement starts a waiting period before you can file suit, but it doesn’t restart or extend the underlying statute of limitation.
When Demand Letters Do Not Start the Statute of Limitation Clock
Let’s address the most common misconception first: for ordinary breach of contract claims, sending a demand letter does not start, restart, or extend the statute of limitation period. The statute of limitation for a written contract claim typically begins running on the date of the breach itself, regardless of when you discover the breach, when you decide to do something about it, or when you send a demand letter.
The General Accrual Rule
Under the default accrual rule that applies in most states, a cause of action for breach of contract accrues when the breach occurs. This means the statute of limitation clock starts ticking at the moment of breach, even if you don’t know about the breach yet, even if the harm isn’t immediately apparent, and even if you’re still in ongoing business discussions with the counterparty.
For example, if your payment processor breaches your merchant services agreement on January 15, 2024, by improperly holding funds without justification, the statute of limitation begins running on January 15, 2024. If you’re in California with a four-year statute of limitation for written contracts, you must file suit by January 15, 2028. Sending a demand letter on June 1, 2024, doesn’t move that deadline to June 1, 2028. The clock started in January when the breach occurred.
This principle applies equally to consultant agreements, software licenses, purchase contracts, and most other commercial arrangements. The breach date controls, not the demand date.
UCC Article 2 Sale of Goods: Four-Year Limitation
For contracts involving the sale of goods, the Uniform Commercial Code establishes a four-year statute of limitation that begins when the breach occurs, regardless of the buyer’s knowledge. Under UCC 2-725, a breach of warranty claim ordinarily accrues at the time of tender of delivery, not when the defect is discovered.
There’s an important exception: if a warranty explicitly extends to future performance of the goods, the cause of action accrues when the breach is or should have been discovered, but not later than the deadline established by the explicit future-performance warranty term.
Parties can modify this limitation period by agreement, but they cannot extend it beyond four years from accrual. They can shorten it, but not below one year. Many vendors include shortened limitation periods (one or two years) buried in their standard terms, so this is worth checking before you calculate your filing deadline.
The key takeaway: your demand letter to a supplier about defective equipment or materials doesn’t reset the four-year UCC clock. That clock started when the goods were delivered or when the defect should have been discovered under a future-performance warranty.
The Discovery Rule: Limited Exceptions
Some states apply a discovery rule that delays accrual until the plaintiff discovers or should have discovered the breach. This is more common for fraud claims than straight breach of contract claims, but some states have extended it to certain contract contexts, particularly construction defects and professional services agreements.
Colorado’s Supreme Court clarified in 2024 that the discovery rule doesn’t apply broadly to written contract claims; rather, accrual generally occurs at breach regardless of discovery. Other states take varying positions, so you need to check your specific jurisdiction.
Even where a discovery rule applies, sending a demand letter isn’t the relevant discovery date. The question is when you knew or should have known about the breach through reasonable diligence. A demand letter might be evidence of when you had knowledge, but it doesn’t establish that date as the accrual date.
Why Demand Letters Still Matter Even Without Starting the SOL Clock
If demand letters don’t start or toll the statute of limitation for ordinary contract claims, why send them at all?
First, demand letters are often required as a condition precedent under contractual notice-and-cure provisions. Failing to send one can bar your claim entirely, regardless of whether the statute of limitation has run.
Second, demand letters satisfy various statutory pre-suit notice requirements (discussed below) that apply to consumer protection claims, construction defects, and certain other specialized areas.
Third, demand letters preserve crucial UCC notice requirements. Under UCC 2-607(3)(a), a buyer who accepts goods must notify the seller of any breach within a reasonable time after discovery or be barred from any remedy. The demand letter serves as that notice.
Fourth, demand letters create a factual record about when breach occurred, what you knew, and what the other party’s response was. This can be critical for tolling arguments, waiver and estoppel defenses, and discovery rule disputes.
Finally, demand letters frequently result in settlements, cures, or partial payments that resolve disputes without litigation. Even if they don’t start the statute of limitation clock, they start negotiations and put the other side on notice that you’re serious.
When Demand Letters Actually Do Start a Clock
While demand letters don’t typically start the statute of limitation clock for ordinary contract claims, there are three significant contexts where your demand letter genuinely does start a legally relevant timeline: demand-dependent obligations, contractual cure periods, and statutory pre-suit notice requirements.
Demand Notes and Demand-Dependent Obligations
Some obligations don’t accrue until a demand is made. The clearest example is a promissory note payable “on demand.”
Under UCC 3-118(b), the statute of limitation for enforcing a note payable on demand is typically six years after demand on the maker. If no demand is made and no payment is received for ten years, the claim is barred. Most states have adopted this UCC provision.
This creates a situation where the demand letter literally starts the statute of limitation clock. Until you make demand, there’s no accrued cause of action and the statute of limitation hasn’t begun running (subject to the ten-year absolute bar).
The law on demand notes isn’t entirely uniform. Some courts have held that demand notes accrue at execution rather than demand, reasoning that the maker is immediately obligated. The weight of authority, however, treats demand as the triggering event that starts the clock.
For business owners holding demand notes or similar demand-dependent obligations, this means your demand letter has real legal significance. You’re not just requesting payment; you’re starting the limitations period for enforcement.
Contractual Notice-and-Cure Provisions
This is where demand letters most commonly have clock-starting significance for contract disputes. Many commercial agreements include notice-and-cure provisions that require written notice and a specified cure period before any termination or legal action.
These provisions serve multiple purposes: they give the breaching party a chance to fix the problem, they avoid unnecessary litigation over minor or easily correctable breaches, and they create a paper trail establishing that proper procedures were followed.
Courts strictly enforce these provisions. If your contract requires 30 days’ written notice before termination or suit, and you file suit after only 25 days, expect the case to be dismissed or stayed. The cure period is a condition precedent to your right to sue.
Your demand letter starts this contractual clock running. The notice must typically include a description of the breach with reasonable specificity and must reference the contractual provision being invoked. Generic, pro forma notices that don’t clearly identify the breach or the contract provision are often found insufficient.
For example, if you’re dealing with a contractor who has materially breached a home renovation contract that includes a 30-day cure provision, your demand letter needs to specifically state: “This letter constitutes formal notice of default under Section 12.3 of the Construction Agreement dated March 15, 2024. The following breaches are identified…” The letter should then detail the specific breaches and explicitly note that the contractor has 30 days from receipt to cure.
For SaaS agreements, MSAs, and service contracts, these cure periods are often tied to material breach and termination rights. A software vendor’s agreement might say: “Either party may terminate for material breach if the breach is not cured within 15 days after written notice.” Your demand letter to that vendor starts that 15-day clock.
One critical practice point: if you’re approaching the statute of limitation deadline and your contract has a cure period, you need to calculate backward. If the statute of limitation expires on January 15, 2028, and your contract requires 30 days’ notice and cure, you need to send your notice letter by mid-December 2027 at the latest to preserve your right to file suit before the statute runs.
In cases where you’re close to the statute of limitation deadline, consider proposing a tolling agreement in your demand letter. This allows the cure period to play out without the pressure of an expiring statute of limitation.
California Consumer Legal Remedies Act (CLRA)
The California Consumer Legal Remedies Act creates a mandatory 30-day pre-suit notice requirement for claims seeking damages. This is a statutory clock that your demand letter starts.
Under California Civil Code Section 1782(a), before filing suit for damages under the CLRA, you must notify the person or entity alleged to have violated the Act. The notice must be in writing and must be sent at least 30 days before filing suit. The notice must describe the specific CLRA violations, the actual damages suffered, and the correction, repair, replacement, or other relief sought.
If the recipient makes an appropriate correction, repair, replacement, refund, or other remedy within 30 days, the consumer cannot proceed with an action for damages (though injunctive relief remains available).
This is a context where the demand letter genuinely starts a mandatory waiting period. You send the CLRA demand letter, you wait 30 days, and then if the violation hasn’t been remedied, you can file suit for damages.
The tricky part: this 30-day notice requirement doesn’t extend the underlying statute of limitation. California’s CLRA claims are generally subject to a three-year statute of limitation. If you’re already close to that deadline, you may need to file suit first to avoid the statute running, then serve the CLRA notice after filing.
The statute contemplates this scenario. If giving the 30-day notice before filing would cause the statute of limitation to expire, you can file first and then provide notice. But you need to understand this timing issue and plan accordingly.
Your CLRA demand letter should enumerate the specific practices that violate the CLRA (the statute lists 33 prohibited practices), specify your actual damages with as much detail as possible, and clearly request the correction or remedy you’re seeking. Generic demand letters that don’t track the statutory requirements won’t satisfy the CLRA notice obligation.
Texas Deceptive Trade Practices Act (DTPA)
Texas has a similar but longer notice requirement. The Texas DTPA requires 60 days’ written notice in reasonable detail before filing suit. The notice must describe the specific complaint and the amount of actual damages and expenses, including attorney’s fees.
Texas Business and Commerce Code Section 17.505 mandates this pre-suit notice. The defendant has 60 days to respond with a settlement offer. If the defendant makes a reasonable offer that the plaintiff rejects, and the plaintiff fails to obtain a more favorable judgment at trial, the plaintiff cannot recover attorney’s fees.
This creates a genuine strategic consideration. Your DTPA demand letter starts a 60-day clock, and the defendant’s response to that letter can affect your ability to recover attorney’s fees even if you win at trial.
Like California’s CLRA, Texas provides an exception if the 60-day notice would be impracticable because the statute of limitation is about to expire. In that case, you can file suit to stop the clock, then provide the DTPA notice after filing.
Your DTPA demand letter needs to provide reasonable detail about the deceptive practice, itemize your actual damages with specificity, and include a calculation of attorney’s fees incurred to date. Generic or vague notices won’t satisfy the statutory requirement.
Construction Right-to-Repair Statutes
Many states have enacted construction defect right-to-repair statutes that require homeowners to provide detailed pre-suit notice and an opportunity for inspection and repair before filing suit against contractors, builders, or developers.
These statutes vary significantly by state, but they generally follow a similar pattern: written notice describing the defect, opportunity for inspection, written offer to repair or pay damages, homeowner’s response, and only then the right to proceed with litigation.
California’s right-to-repair statute (Civil Code Sections 895-945.5) is among the most detailed. Before suing for construction defects in residential properties, the homeowner must provide written notice that includes specific information about each alleged defect. The builder then has specified timeframes to inspect, test, and respond with an offer to repair, compromise, or resolve the claim.
Arizona, Colorado, Nevada, Oregon, Wisconsin, Alaska, and numerous other states have similar statutes with varying notice periods, inspection windows, and procedural requirements.
These statutes create multi-step pre-litigation processes where the initial demand letter starts a series of clocks. The notice letter triggers the builder’s right to inspect. After inspection, the builder has a specified time to respond. The homeowner then has a specified time to accept or reject the offer. Only after working through this entire statutory process can the homeowner file suit.
Failing to complete the statutory process before filing usually results in dismissal or a stay. Courts enforce these requirements strictly because they’re designed to encourage pre-litigation resolution and give builders a chance to repair defects.
For homeowners dealing with construction defects, the demand letter is the critical first step in a statutorily mandated process. It must include detailed descriptions of each defect, must be sent to all potentially responsible parties, and must strictly follow the statutory format requirements.
The practical challenge: these right-to-repair procedures can take months to complete. If you’re approaching a statute of limitation deadline, you need to start the process early enough that the entire statutory procedure can play out before the limitation period expires.
State-by-State Statute of Limitation Overview for Written Contracts
Understanding your statute of limitation deadline is essential before you send any demand letter. The variation among states is substantial, and getting this wrong can be catastrophic.
Short Limitation Periods (3 Years)
Several states have relatively short three-year limitation periods for written contract claims: Alaska, Colorado, Delaware, District of Columbia, Maryland, Mississippi, New Hampshire, North Carolina, and South Carolina all fall into this category.
For businesses in these jurisdictions, the three-year clock leaves little room for extended negotiations or delays. If you’re in a Colorado contract dispute and the breach occurred in early 2024, you need to file by early 2027. That sounds like plenty of time, but it disappears quickly when you factor in investigation, demand letters, negotiation, and the possibility that the other side might stall.
Four-Year Periods
California applies a four-year statute of limitation for written contracts under Code of Civil Procedure Section 337. This also aligns with the UCC’s four-year period for sale-of-goods claims.
Texas similarly applies a four-year period under Texas Civil Practice and Remedies Code Section 16.004.
The four-year period is relatively common and represents something of a middle ground in the national landscape.
Five-Year Periods
Florida (Florida Statutes Section 95.11(2)(b)), Kansas, Idaho, Missouri (for some categories), Nebraska, Oklahoma, and Virginia all provide five-year limitation periods for written contracts.
Five years provides more breathing room but still requires prompt attention to contract breaches. For a Florida business with a contract breach in 2024, the 2029 deadline might seem distant, but you need to reserve time for the entire pre-litigation process, including demand letters, negotiations, potential cure periods, and any applicable statutory notice requirements.
Six-Year Periods
A large group of states clusters around six years: Alabama, Georgia, Hawaii, New Jersey, New Mexico, New York, Oregon, South Dakota, Tennessee, Utah, Vermont, Washington, and Wisconsin.
New York’s six-year period for written contracts under New York Civil Practice Law and Rules Section 213 is particularly significant given how many commercial contracts include New York choice-of-law provisions. If your contract is governed by New York law, you get six years from breach to file suit.
This longer period can be both a blessing and a curse. It provides flexibility and negotiating time, but it also means the other side has more time to file suit against you if you’re the potential defendant.
Longer Periods (8-10+ Years)
Montana and Ohio have eight-year periods for some written contracts. Illinois (735 Illinois Compiled Statutes 5/13-206) gives you ten years for written contracts. Iowa (Iowa Code Section 614.1) similarly provides ten years. Louisiana gives ten years under Louisiana Civil Code Article 3499.
Kentucky is particularly generous, with ten to fifteen years depending on when the contract was executed (Kentucky Revised Statutes Sections 413.090 and 413.160).
These longer limitation periods are outliers in the national landscape. For businesses in Illinois, Louisiana, or Iowa, the extended time period provides substantial flexibility for complex commercial disputes, but it also means potential exposure lasts much longer.
The Importance of Choice-of-Law Provisions
Many sophisticated commercial contracts include choice-of-law provisions specifying which state’s law governs the agreement. This choice directly impacts the applicable statute of limitation.
A contract between a California company and a Texas company might specify New York law and New York venue. That choice would give the parties New York’s six-year limitation period instead of California’s four years or Texas’s four years. This can make a material difference in close-to-deadline situations.
When negotiating contracts, the choice-of-law provision deserves careful attention. The longer statute of limitation isn’t always better; it cuts both ways, extending the period during which you might face claims as well as the period during which you can assert them.
Contractual Shortening of Limitation Periods
Many contracts, particularly vendor form agreements and consumer contracts, include provisions that shorten the applicable statute of limitation. This is generally permissible within limits.
Under UCC 2-725, parties can shorten the four-year limitation period for sale-of-goods claims, but not to less than one year. Many equipment suppliers, software vendors, and manufacturers include one-year or two-year contractual limitation periods in their standard terms.
For non-UCC contracts, states vary on whether and how much parties can shorten limitation periods. Some states restrict shortening for consumer contracts or insurance policies. Others allow broad contractual modification of limitation periods.
Before calculating your filing deadline, check whether your contract includes a shortened limitation period. These provisions are often buried in boilerplate and easy to miss. A standard “four-year” contract statute of limitation can become a one-year deadline if your contract says so.
Practical Timeline Management for Different Business Contexts
Understanding the abstract legal rules is one thing; applying them to your specific business situation is another. Let me walk through how these timing issues play out in the contexts I see most frequently.
Small Business and Contractor Disputes
When a contractor abandons a renovation project, completes shoddy work, or otherwise breaches a construction contract, you’re typically dealing with three potential timing frameworks simultaneously.
First, identify your state’s statute of limitation for written contracts. In California, that’s four years. In Florida, five years. In New York, six years. The clock started running when the contractor breached, not when you decided to do something about it.
Second, check whether your state has a construction right-to-repair statute. California, Arizona, Nevada, Colorado, and many others do. These statutes require specific pre-suit notice procedures that can take months to complete. You need to initiate this process early enough that it can fully play out before the statute of limitation expires.
Third, review your construction contract for notice-and-cure provisions. Many contracts require written notice and 30 to 60 days to cure before termination or suit. This is a condition precedent that you must satisfy.
If the breach occurred three years ago, your statute of limitation expires in one year (using California’s four-year period as an example), and your contract requires 30 days’ notice and cure, you need to act now. You should send a demand letter that: identifies the specific contractual breaches with particularity, references the notice-and-cure provision and explicitly starts that contractual clock, initiates the statutory right-to-repair process if applicable, and reserves all rights and remedies.
If the statute of limitation is tight and the right-to-repair process will take months, you may need to propose a tolling agreement to avoid having to file a lawsuit prematurely. The tolling agreement pauses the statute of limitation while you work through the statutory repair process and contractual cure period.
Tech, SaaS, and Payment Processor Disputes
Technology and SaaS disputes often involve multiple contractual agreements (master service agreement, statement of work, service level agreement, acceptable use policy) with different notice and termination provisions.
Payment processor disputes add another layer of complexity because they often involve card network rules and deadlines that operate independently of contract law.
For a typical payment processor dispute where they’ve frozen your merchant account or held funds without justification, you need to identify which agreement actually governs. Is it the merchant processing agreement? The platform agreement? Both?
Check for contractual cure periods. Many processing agreements include 15-day or 30-day cure periods for material breaches. Your demand letter needs to trigger this clock explicitly.
Determine the applicable statute of limitation. If the agreement has a choice-of-law provision for Delaware, New York, or California, that tells you whether you’re working with a three-year, six-year, or four-year deadline. Many processor agreements also include contractual shortening provisions that reduce the period to one or two years, so read carefully.
For card network disputes (Visa, Mastercard, etc.), there are separate chargeback and arbitration deadlines that exist outside the contract law framework. These are usually much shorter, 45 to 120 days in many cases. You need to preserve your rights under both the merchant agreement and the card network rules simultaneously.
Your demand letter should reference the specific contract provisions you’re relying on, identify the cure period under the applicable notice-and-cure clause, preserve your rights under card network rules, and include a litigation hold paragraph requesting preservation of transaction records, communications, and decision-making documentation (this becomes critical if you end up in discovery).
For SaaS vendors who improperly terminate your service, similar principles apply. Check the MSA and SLA for notice requirements, identify the applicable statute of limitation, and structure your demand letter to satisfy any contractual prerequisites while preserving your ability to file suit before the statute runs.
Consumer Protection Claims (CLRA, DTPA, and Similar Statutes)
Consumer protection claims add a layer of statutory complexity because you need to satisfy both the statutory pre-suit notice requirement and meet the general statute of limitation deadline.
For California CLRA claims, you need 30 days between sending notice and filing suit (unless the statute of limitation is about to run). The notice must enumerate the specific CLRA violations from the statutory list of 33 prohibited practices, specify your actual damages with particularity, and clearly state the correction or remedy you’re seeking.
Generic demand letters don’t satisfy this requirement. Your CLRA notice needs to say explicitly: “This letter constitutes notice under California Civil Code Section 1782 of violations of the Consumer Legal Remedies Act. Specifically, [Defendant] has violated the following provisions…” Then list the specific subsections of Civil Code Section 1770 that apply.
For Texas DTPA claims, you need 60 days’ advance notice with reasonable detail of your complaint and itemized actual damages including attorney’s fees. The defendant’s response within that 60-day window can affect your ability to recover attorney’s fees at trial, so there are real strategic considerations in how you evaluate any settlement offer.
If you’re close to the statute of limitation deadline, these statutes generally allow you to file first and then provide notice afterward. But you need to understand this timing issue upfront and plan accordingly. Don’t assume the statutory notice requirement extends the limitation period; it doesn’t.
For consumer protection claims, your demand letter must be statute-specific. A general “you breached the contract” letter doesn’t satisfy CLRA or DTPA notice requirements. You need to identify the statutory basis, cite the specific statutory provisions, and provide the level of detail the statute requires.
Essential Elements of a Clock-Starting Demand Letter
When you’re drafting a demand letter that needs to start contractual or statutory clocks, certain elements are essential. A generic demand letter might get the conversation started, but it won’t protect your legal rights if you haven’t included these components.
Clear Identification of Governing Agreements
State explicitly which contract or agreement you’re referencing. Don’t assume the recipient will figure it out. Include the title of the agreement, the execution date, the parties, and any amendment numbers.
For example: “This letter concerns the Master Service Agreement executed March 15, 2023, between Acme Corp. and Beta Services LLC, as amended by Amendment No. 1 dated August 10, 2023.”
If multiple agreements might apply, reference all of them. You don’t want to discover later that you failed to invoke the right agreement and therefore didn’t satisfy a notice requirement.
Specific Invocation of Notice-and-Cure Provisions
If your contract has a notice-and-cure clause, quote it or at minimum reference it specifically. Include language that explicitly starts the contractual clock.
Example language: “Pursuant to Section 12.3 of the Agreement, which requires written notice and a 30-day cure opportunity before termination, this letter constitutes formal notice of default. The breaches described below must be cured within thirty (30) days of your receipt of this letter.”
Be explicit that you’re invoking the contractual notice procedure. Courts sometimes find that generic demand letters don’t satisfy notice-and-cure requirements because they don’t clearly invoke the contractual provision.
Detailed Description of Breaches
Describe the specific breaches with enough detail that the recipient can understand what they allegedly did wrong and what they need to do to cure. Vague, conclusory allegations won’t satisfy notice requirements.
Instead of: “You breached the contract by failing to perform your obligations.”
Use: “You have failed to complete the kitchen renovation work specified in Exhibit A of the Agreement. Specifically: (1) the cabinet installation remains incomplete with 8 of 12 cabinets uninstalled; (2) the countertop installation has not been initiated despite being due for completion by October 15, 2024; (3) the plumbing fixtures specified in the Agreement have not been ordered or installed; and (4) you have not appeared at the work site since October 20, 2024, despite the Agreement requiring continuous performance until completion.”
This level of detail serves multiple purposes. It satisfies the specificity requirement for notice provisions. It makes clear what needs to be cured. And it creates a contemporaneous record of exactly what was wrong at the time of notice.
Statutory Compliance for CLRA, DTPA, and Right-to-Repair
If you’re invoking a statutory notice requirement, follow the statute’s requirements explicitly. For CLRA notices, enumerate the specific statutory violations from the list in Civil Code Section 1770. For DTPA notices, provide reasonable detail and itemize damages. For right-to-repair notices, include all information required by your state’s statute.
Don’t try to combine a statutory notice with a general contract demand in a way that obscures which is which. If you need to satisfy both a contractual cure period and a CLRA notice requirement, consider sending separate letters or at minimum clearly delineate which parts of your letter serve which purpose.
Reservation of Rights
Always include language reserving all rights and remedies. Specify that nothing in the letter constitutes a waiver of any claim or right, that acceptance of partial payment or partial cure doesn’t waive your right to full performance, and that the letter doesn’t limit your right to seek all available remedies.
Example language: “This letter is without prejudice to all rights and remedies available at law or in equity. Nothing in this letter shall be construed as a waiver of any right or remedy. Acceptance of any partial payment or partial cure shall not constitute a waiver of full performance or of any right to pursue all available remedies for the breaches described herein.”
This language protects you if the recipient attempts to partially cure or makes a partial payment. You don’t want them arguing later that you accepted the partial cure as full satisfaction or that you waived your right to pursue the claim.
Litigation Hold and Document Preservation
Include a paragraph requiring preservation of documents and electronically stored information. This creates a duty to preserve evidence and lays the groundwork for spoliation sanctions if the recipient destroys relevant evidence.
Example language: “You are hereby on notice that litigation is reasonably anticipated. You must immediately institute a litigation hold to preserve all documents, electronically stored information, data, communications, and records related to the Agreement and the matters described in this letter. This includes but is not limited to emails, text messages, financial records, work files, and all other potentially relevant information. Failure to preserve this information may result in sanctions including adverse inference instructions and monetary penalties.”
This paragraph is particularly important in payment processor disputes (where transaction data and decision-making records are crucial) and construction disputes (where project documentation, communications, and photographs are essential).
Calculation of Cure Period and Response Deadline
Be explicit about deadlines. If you’re invoking a 30-day contractual cure period, state clearly: “This cure period expires thirty (30) days from your receipt of this letter, which is anticipated to be on or about [date].”
If you’re making a settlement demand, state your deadline: “A written response to this demand must be received by [specific date].”
Don’t leave timing ambiguous. The recipient needs to know exactly when their cure window closes or when your offer expires.
Settlement Demand vs. Notice Function
Decide whether your letter is primarily a settlement demand or primarily a contractual/statutory notice. These can be combined, but the priority matters.
If your primary goal is satisfying a notice-and-cure requirement or statutory notice obligation, lead with that and make it unambiguous. You can include settlement language as a secondary element.
If your primary goal is settlement and you’re just checking the box on notice requirements, you can structure it differently. But be careful that your settlement language doesn’t undermine the notice function. For example, if you make a settlement offer that doesn’t address the specific cure contemplated by the contractual cure provision, a court might find you didn’t actually provide a proper notice-and-cure opportunity.
Common Timing Mistakes That Kill Claims
In over a decade of practice, I’ve seen recurring timing mistakes that destroy otherwise viable claims. These are the traps to avoid.
Assuming the Demand Letter Starts the Statute of Limitation
This is the most common error. Business owners send a demand letter and mentally calculate their statute of limitation from that date. Then two years later, when they’re ready to file suit, they discover the statute of limitation actually started running three years before they sent the demand, and their claim is now barred.
Always calculate your statute of limitation from the breach date, not the demand date. Use the demand date only for calculating contractual cure periods and statutory notice waiting periods.
Failing to Account for Contractual Limitation Periods
Many contracts shorten the statute of limitation to one or two years. If you calculate based on your state’s four-year or six-year statute for written contracts, but your contract says “all claims must be brought within one year of accrual,” you’re going to miss your deadline.
Read your contract before you calculate deadlines. The limitation period might be shorter than you think.
Sending Generic Demands That Don’t Satisfy Notice Requirements
A demand letter that says “you breached the contract, pay me $50,000” might start negotiations, but it won’t satisfy a contractual notice-and-cure requirement, a CLRA notice obligation, or a right-to-repair statute.
Match your demand letter to the specific legal requirements it needs to satisfy. If your contract requires “written notice describing the breach with reasonable specificity,” provide that level of detail. If the CLRA requires enumeration of specific statutory violations, enumerate them.
Confusing Cure Periods with Statutes of Limitation
The 30-day cure period in your contract operates independently from the four-year statute of limitation. You need to satisfy the cure period requirement, but that doesn’t extend the statute of limitation deadline.
If you have one year left on your statute of limitation and you send a notice letter triggering a 60-day cure period, you have about ten months after the cure period expires to file suit. The cure period doesn’t add to your limitation period; it just creates a prerequisite you must satisfy.
Accepting Stall Tactics That Run Out the Clock
Defendants and their lawyers understand timing pressures. If you send a demand letter and the recipient asks for extensions, proposes lengthy investigation periods, or engages in open-ended settlement discussions, they might be running out your clock.
Watch your deadlines even during settlement negotiations. If you’re approaching your statute of limitation deadline and the other side is stalling, consider filing suit to stop the clock and continuing settlement discussions after filing. Or propose a written tolling agreement that pauses the statute of limitation during negotiations.
Letting Right-to-Repair Procedures Consume Your Limitation Period
Construction right-to-repair procedures can take four to six months to complete. If you initiate the statutory process with six months left on your statute of limitation, you might not have time to complete the process and file suit.
Calculate backward from your statute of limitation deadline. Allow enough time for the complete right-to-repair process, any contractual cure periods, and the actual filing and service of the lawsuit. If you don’t have enough time, you need a tolling agreement or you need to file to stop the clock.
FAQ
What happens if I file suit before completing a contractual cure period?
If your contract contains a notice-and-cure provision that’s a condition precedent to suit, filing before completing the cure period will typically result in dismissal without prejudice or a stay of the action while you complete the cure procedure. The court will send you back to satisfy the contractual prerequisite. This doesn’t necessarily kill your claim, but it wastes time, money, and legal fees. In some cases, if you were already close to the statute of limitation deadline when you filed prematurely, the delay caused by dismissal and refiling could cause your claim to become time-barred. The better practice is to plan ahead, send proper notice, wait out the cure period, and then file if the breach isn’t cured. If you’re running up against a statute of limitation deadline and don’t have time for the full cure period, consider proposing a tolling agreement that pauses the statute of limitation while the cure period plays out.
Can the other party extend the statute of limitation by promising to fix the problem?
No, informal promises or settlement discussions don’t extend the statute of limitation. The limitation period continues running during negotiations unless you have a written tolling agreement signed by both parties. Some business owners mistakenly believe that if the defendant is “working on it” or has “promised to make it right,” the statute of limitation is somehow paused. It isn’t. I’ve seen clients lose claims because they spent two years in good-faith settlement discussions only to have the defendant suddenly stop negotiating right before the statute of limitation expired, leaving no time to file suit. If you’re negotiating near a statute of limitation deadline, get a written tolling agreement. A proper tolling agreement specifies that the statute of limitation is paused during negotiations, typically includes a termination provision (either party can terminate with notice), and is signed by authorized representatives of both parties. Without a written tolling agreement, the clock keeps running.
If my contract is governed by California law but I’m located in Texas, which statute of limitation applies?
The statute of limitation is generally determined by the law of the forum state (where the lawsuit is filed), not by the contractual choice-of-law provision, although there are exceptions and complexities. If you file suit in Texas, Texas will likely apply its own four-year statute of limitation for written contracts even if your contract says it’s governed by California law. However, if your contract also includes a forum selection clause requiring litigation in California courts, then California’s four-year period would apply both because California is the forum and because California is the chosen law. This is why forum selection clauses matter as much as choice-of-law provisions. The interaction can get complicated when a contract chooses the law of one state but doesn’t specify a forum, or when a party tries to sue in a different state than the one specified in the contract. If this scenario applies to your situation, consult with an attorney about which statute of limitation will actually govern before you calculate your deadline. Getting this wrong can be fatal to your claim.
Does the statute of limitation restart if the other party makes a partial payment after the breach?
Generally no, a partial payment doesn’t restart the statute of limitation, though it can constitute an acknowledgment of the debt that might have other legal effects under some state laws. The statute of limitation clock continues running from the original breach date. However, in some limited circumstances, a new promise to pay or a new agreement might create a new cause of action with a new accrual date. For example, if after the original breach the parties enter into a written settlement agreement that itself gets breached, you now have a claim for breach of the settlement agreement with a new accrual date. But a simple partial payment or an oral promise to “work something out” doesn’t restart the clock. This is another reason why reservation-of-rights language in your demand letter is important: you want to make clear that accepting any partial payment doesn’t constitute satisfaction of the full obligation and doesn’t waive your right to pursue the full claim. Without that language, the defendant might argue that you accepted the partial payment as settlement in full, or that your acceptance of payment modified the agreement.
How do I know if my state has a discovery rule that delays the statute of limitation?
You need to research your specific state’s law or consult with a lawyer in that jurisdiction. The discovery rule isn’t uniform across states, and even within states it often applies to some types of claims but not others. Generally, the discovery rule is more likely to apply to fraud claims, professional malpractice claims, and certain construction defect claims than to ordinary breach of written contract claims. The default rule in most states for written contract claims is that accrual occurs at breach, not at discovery. But there are exceptions, and recent case law in some states has modified or clarified the discovery rule’s application. Colorado’s Supreme Court clarified in 2024 that the discovery rule doesn’t apply broadly to written contracts. Other states continue to apply it in specific contexts. If you’re dealing with a situation where you didn’t discover the breach until years after it occurred, and your statute of limitation might have run under the default accrual rule, the discovery rule could be crucial. Get competent legal advice specific to your state and your type of claim before assuming the discovery rule saves you.
If I’m a California business owner but my customer is in Texas, can I rely on California’s four-year statute of limitation?
It depends on where you would need to file suit and what your contract says. If your contract includes a forum selection clause requiring disputes to be litigated in California courts, then California’s limitation period would apply. If there’s no forum selection clause and you need to sue in Texas (perhaps because that’s where the defendant is located and that’s the only court with personal jurisdiction), Texas will likely apply its own four-year statute of limitation. If you have a choice of where to file and both states have similar limitation periods (California and Texas both have four years for written contracts), this might not matter much. But if you’re comparing a three-year state to a six-year state, the difference is significant. This is another example of why forum selection clauses and choice-of-law provisions matter when you’re negotiating contracts. These provisions allow you to control not just which substantive law applies but also which procedural rules, including statutes of limitation, will govern any future dispute. If you draft the contract, include clear forum selection and choice-of-law provisions. If you’re reviewing someone else’s form contract, pay attention to these clauses and negotiate them if they’re unfavorable.
What if I send the required CLRA or DTPA notice but the 30 or 60 days won’t expire before the statute of limitation runs?
Both the California CLRA and Texas DTPA contemplate this scenario and allow you to file suit to stop the statute of limitation clock, then serve the required notice after filing. This prevents the notice requirement from effectively shortening the statute of limitation. However, the mechanics of doing this correctly matter. For the CLRA, Civil Code Section 1782 allows filing before the 30 days expires if the statute of limitation is about to run. For the DTPA, Texas Business and Commerce Code Section 17.505 allows filing first when the 60-day notice would be “impracticable” due to the impending statute of limitation. In either case, you need to understand that you’re filing first and providing notice second, and you need to comply with any procedural requirements for doing so. This is not an ideal situation because it means initiating litigation before allowing any opportunity for pre-suit settlement. The better practice is to monitor your deadlines carefully and send notice early enough that the statutory waiting period can expire before the limitation period runs. If you find yourself in the situation where filing first is necessary, consult with an attorney to ensure you handle the procedural requirements correctly.
Can I shorten the statute of limitation in my contracts when I’m the one drafting them?
Generally yes, within limits, and it depends on the type of contract and your state’s law. Under UCC 2-725 for sale-of-goods contracts, you can shorten the four-year limitation period, but not to less than one year. For non-UCC contracts, states vary on the enforceability of shortened limitation periods. Most states allow parties to shorten limitation periods in commercial contracts between sophisticated parties. However, some states restrict this for consumer contracts, employment contracts, or insurance contracts, viewing shortened limitations as potentially unconscionable or against public policy in contexts with unequal bargaining power. If you’re drafting contracts and want to include a shortened limitation period (which can be valuable for managing long-tail risk), make sure the provision is conspicuous, reasonable, and complies with any restrictions in your state. A one-year limitation period is generally enforceable in commercial contexts. Trying to shorten it to 90 days or six months might face enforceability challenges. Also be aware that what seems like an advantage (shortening the time the other party can sue you) also means you have less time to pursue claims against them. Consider whether the trade-off makes sense for your business model.