How to Write a Demand Letter for a Breach of Service Agreement (Marketing, Dev, Consulting
You hired a marketing agency to launch your Q4 campaign. They cashed your $15,000 check, missed every deadline, and delivered unusable creative assets two months late. Or maybe you paid a dev shop $40,000 for a custom web application that crashes constantly and fails basic security tests. Perhaps your business consultant took a $10,000 retainer and ghosted you after one phone call.
These scenarios play out daily in B2B service relationships. When a vendor breaches your service agreement, a well-crafted demand letter is often your most cost-effective path to resolution. It preserves evidence, establishes a clear record, and frequently prompts settlement without the expense of litigation or arbitration.
This guide walks you through writing a demand letter that’s legally sound, business-focused, and effective—without crossing into extortion or defamation territory. I’ve handled hundreds of service agreement disputes over 13 years of practice, and I’ll share the framework that works whether you’re dealing with marketing agencies, development shops, or consulting firms.
Step 1: Confirm You Actually Have a Breach
Before drafting anything, verify you have a legitimate breach of contract claim. Under California law (and most states follow similar principles), a breach of contract requires four elements:- A valid contract existed between you and the service provider
- You performed your obligations or have a legal excuse for not performing
- The service provider breached the contract
- You suffered damages as a result
The “Time Is of the Essence” Factor
Review whether your contract states that “time is of the essence” for any deadlines. This language makes timely performance a material term of the contract, strengthening your breach claim if deadlines were missed. Even without this specific phrase, you may still have a strong claim if timing was clearly critical (like a holiday season campaign or a product launch tied to a specific date).Step 2: Know What You Want
Before writing your demand letter, clarify your goal. Contract law recognizes three types of damages, and understanding which applies to your situation will shape your demand: Expectation damages put you in the position you would have been in had the contract been performed correctly. This might mean demanding that the vendor complete the work properly at their expense, or that they refund your money so you can hire someone else to do it right. Reliance damages reimburse you for expenditures made in reasonable reliance on the contract. If you paid a marketing agency $20,000 and they delivered nothing usable, you’re seeking reliance damages when you demand that $20,000 back. Restitution prevents unjust enrichment by requiring the vendor to return the value of benefits they received without performing. This often overlaps with reliance damages in service contracts. For most service agreement breaches, you’ll pursue one of these remedies: (1) a full or partial refund of amounts paid for non-performance or defective work, (2) completion of the contracted work by a hard deadline at the vendor’s expense, (3) reimbursement for the cost of hiring a replacement vendor to finish or redo the work, or (4) a combination of partial refund plus completion of specific deliverables. Quantify your damages specifically. “I want my money back” is weaker than “I demand a refund of $15,000 representing the full amount paid for services that were never delivered, plus $3,200 in documented costs to hire a replacement agency to complete the project.”Step 3: Check Your Contract’s Fine Print
Three types of contract clauses will shape your demand letter strategy: dispute resolution provisions, notice and cure requirements, and attorney’s fees clauses.Dispute Resolution Clauses
Many service agreements require arbitration instead of litigation. Check whether your contract specifies arbitration through the American Arbitration Association (AAA), JAMS, or another forum. If arbitration is mandatory, your demand letter should acknowledge this while still attempting to resolve the matter without filing. Mention that you’re prepared to initiate arbitration if necessary. Also note the governing law and jurisdiction provisions. If your contract is governed by California law but requires venue in New York, this affects your litigation strategy and should be reflected in how you frame the legal basis for your claims.Notice and Cure Provisions
Some contracts require you to provide written notice of a breach and give the vendor a specified number of days (often 15-30) to cure before you can pursue remedies. Your demand letter can serve as this contractual notice. Reference the specific contract provision requiring notice, state that you’re providing notice as required, and set a cure deadline that complies with the contract terms. If the contract doesn’t require notice, you can still offer a reasonable opportunity to resolve the issue (typically 10-14 days) as a practical matter and to demonstrate good faith if you later need to pursue legal action.Attorney’s Fees
California Civil Code Section 1717 creates reciprocity for attorney’s fees provisions. If your contract states that the prevailing party in any dispute is entitled to attorney’s fees, this applies to both parties regardless of how the clause is worded. This is valuable leverage: it means you can potentially recover your legal costs if you prevail, and it creates financial risk for the vendor if they force you to sue. For certain claims involving “book accounts” (essentially, unpaid invoices for services or goods), California Civil Code Section 1717.5 provides for attorney’s fees even without a contractual provision. This can be relevant if part of your dispute involves unpaid reimbursements or expenses.Step 4: Gather Your Evidence
A demand letter without evidence is just complaining. Before drafting, compile documentation that proves each element of your breach claim. This checklist covers what you need: Contract documents: Every agreement, amendment, SOW, proposal, change order, and written approval that defines the relationship and the scope of work. Payment proof: Invoices you received, payment receipts, bank statements, PayPal or Stripe transaction records, or wire transfer confirmations showing what you paid and when. Project communications: Email chains, Slack or Microsoft Teams conversations, project management tool history (Jira, Trello, Asana, Monday.com), meeting notes, and any other communications about deliverables, deadlines, or quality issues. Deliverable evidence: For marketing work, this includes ad creative files, campaign screenshots, analytics reports, and performance data. For development work, collect the codebase (if you have access), before-and-after screenshots, bug reports, test results, security scan results, and Git commit history showing the work performed. For consulting, gather any reports, presentations, analyses, or other work product delivered. Damages documentation: Invoices from replacement vendors, documentation of lost business opportunities (like missed sales from a delayed campaign), records of additional advertising spend needed to make up for poor performance, or downtime logs if a failed system caused business interruption. Organize this evidence chronologically. Your demand letter will tell a story, and the evidence should flow logically from contract formation through breach to damages.Step 5: Write the Demand Letter
An effective demand letter follows a clear structure that presents your case logically, provides specific evidence, states what you want, and creates a path to resolution. Here’s the anatomy of a strong demand letter:Header and Opening
Use professional letterhead if you have it, or at minimum include your full name, company name, address, phone, and email at the top. Date the letter. Include the recipient’s name, title, company name, and address. Add a subject line: “Re: Demand Regarding Breach of Service Agreement dated [date]” Open with a direct statement of purpose: “I am writing to address significant issues that have arisen under our Service Agreement dated [date] regarding your provision of [type of services]. Despite multiple attempts to resolve these issues informally, your company has failed to perform its contractual obligations. This letter serves as formal notice of breach and a final opportunity to resolve this matter without legal action.”Background and Contract Summary
Provide a concise factual timeline. State when the contract was formed, what services were promised, what you paid, and what deadlines or quality standards were agreed upon. Reference specific contract provisions: “Under Section 3.2 of the Agreement and Exhibit A (Statement of Work), you agreed to deliver [specific deliverables] by [specific date] in exchange for payment of $[amount].” Keep this section to one or two paragraphs. You’re establishing the baseline: what was supposed to happen.Statement of Breach
This is where you detail what went wrong. Organize by type of breach if multiple issues exist (non-performance, missed deadlines, quality failures). For each breach, state the contractual obligation, describe the vendor’s failure, and provide specific evidence. For non-performance: “To date, aside from two brief planning calls in September, you have not delivered any of the contracted marketing materials or launched any advertising campaigns. The deliverables listed in Exhibit A remain undelivered despite full payment of $15,000 on August 15, 2025.” For missed deadlines: “Section 2.1 of the SOW required completion of the beta version by October 1, 2025, with final deployment by November 1, 2025. As of November 19, 2025, the application remains in early development stage, and you have indicated that completion is at least two months away—a delay that defeats the entire purpose of this project, which was tied to our Q4 product launch.” For quality failures: “The web application delivered on October 30, 2025, fails to meet the specifications in Exhibit B in multiple material respects: (1) The payment processing integration does not function with our Stripe account as specified; (2) The mobile responsive design fails on devices under 768px width, contrary to Section 4.3 requirements; (3) Basic security testing revealed three critical vulnerabilities, including exposed API keys and lack of input sanitization; and (4) The admin dashboard referenced in Section 5.1 was not included in the delivery.”Contractual and Legal Basis
You don’t need to write a legal brief, but briefly ground your claim in contract principles: “Your failure to perform constitutes a material breach of our Service Agreement. As a result of this breach, I have suffered and will continue to suffer financial damages.” If your contract has relevant provisions about quality standards, approval rights, or termination, reference them: “Section 7.2 of the Agreement gives me the right to reject deliverables that do not conform to the agreed specifications and to terminate for cause if deficiencies are not cured within 15 days of notice. This letter serves as that notice.”Damages and Quantification
State your damages clearly and specifically: “As a direct result of your breach, I have incurred the following damages: (1) $15,000 paid for services that were not delivered; (2) $3,200 in costs to engage a replacement agency to complete the project on an emergency timeline; (3) Estimated $8,000 in lost sales due to missing our target launch date; and (4) Ongoing reputational harm from the delayed market entry.” Where possible, attach supporting documentation: replacement vendor invoices, screenshots showing the incomplete or defective work, analytics showing lost traffic or sales, or other evidence that quantifies harm.Your Demand
State exactly what you want and when you want it: “To resolve this matter without further legal action, I demand the following: (1) A full refund of $15,000 paid under the Agreement; (2) Immediate transfer of all project assets, including raw files, credentials, and any work product created during the project; and (3) Reimbursement of $3,200 in replacement vendor costs, for a total of $18,200.” Set a specific deadline: “I require your response accepting this demand no later than 5:00 p.m. Pacific Time on December 3, 2025 (14 days from the date of this letter).” Offer a reasonable alternative if appropriate: “Alternatively, if you are prepared to complete the contracted work to the specifications in Exhibit B within 21 days at no additional cost, with daily progress updates and your agreement to a mutual release upon satisfactory completion, I am willing to consider this resolution.”Next Steps and Reservation of Rights
Be clear but professional about consequences: “If I do not receive a satisfactory response by the deadline, I will pursue all available remedies, including filing a claim in [arbitration forum specified in the Agreement / superior court in Los Angeles County]. Under Section 9.4 of our Agreement, the prevailing party is entitled to recover attorney’s fees and costs, which I will seek in full.” End with a reservation clause: “Nothing in this letter constitutes a waiver of any rights or remedies, all of which are expressly reserved. This letter is a settlement communication under applicable evidence codes and is not an admission of any fact or liability.”Tailored Tips for Marketing, Development, and Consulting Disputes
Marketing Agency Breaches
Marketing disputes often center on campaign performance, creative quality, or reporting accuracy. When the issue is poor campaign results, be careful to distinguish between breach (they didn’t do what they promised) and disappointment (they did what they promised but results weren’t great). Your breach claim is stronger if the contract specified objective metrics or deliverables rather than vague promises about results. For example, if your contract promised “50 blog posts of at least 1,000 words each, optimized for target keywords, delivered between July-September 2025,” you have a clear breach if they delivered only 20 posts or delivered 50 posts of 300 words each. If the contract promised “SEO services to improve your search rankings,” and they did perform SEO work but rankings didn’t improve, you have a much weaker breach claim (though you might have fraud or misrepresentation claims if they made specific guarantees). Marketing contracts often involve third-party accounts (Google Ads, Facebook Business Manager, analytics platforms). Your demand letter should include a specific requirement that they immediately transfer ownership or access rights to these accounts and provide all historical data. Vendors sometimes hold these accounts “hostage” during disputes, which can compound your damages.Development and Technical Services Breaches
Software development disputes benefit from objective quality metrics. If your contract included acceptance criteria, testing requirements, or performance benchmarks, use these in your demand letter: “The application fails to meet the performance requirements in Section 4.7, which specified page load times under 2 seconds and support for 500 concurrent users. Our testing on November 10 showed load times averaging 8-12 seconds and system crashes at 150 concurrent users.” Source code and intellectual property transfer are critical in dev disputes. Your demand should specifically require: (1) Transfer of all source code repositories with complete commit history; (2) Documentation of the codebase, including API documentation and deployment instructions; (3) Transfer of all accounts, credentials, and API keys; (4) Confirmation of IP assignment as required by your contract; and (5) Removal of any vendor access to your systems or data. If the vendor built your application on their own infrastructure or using their proprietary tools, you may have additional complications. Address this directly: “Under Section 8.2, you agreed that all work product would be delivered as fully independent code with no dependencies on your proprietary systems. The delivered application’s reliance on your API services violates this provision and renders the deliverable unusable.”Consulting and Professional Services Breaches
Consulting relationships are often more ambiguous than product or project-based services, which can make breach claims trickier. Strengthen your position by tying the breach to specific deliverables or time commitments in the contract. “Your proposal dated June 1, 2025 (which forms part of our Agreement under Section 1.3) specified that you would provide 40 hours of strategic consulting per month, including weekly calls and a detailed monthly report. In the three months since contract signing, you have conducted only two calls totaling 45 minutes and have provided no written reports.” When consultants simply go dark after receiving payment, emphasize the pattern: “Following receipt of the $10,000 retainer on August 1, you participated in one 30-minute introductory call on August 5. Since then, despite my emails on August 12, August 26, September 8, September 22, October 1, and October 15 (copies attached), you have not responded or provided any services whatsoever.”Legal Guardrails: Don’t Cross the Line Into Extortion or Defamation
A demand letter should be firm and clear about consequences, but there’s a line between hardball negotiating and illegal threats. Understanding these boundaries protects you from turning a breach of contract dispute into a criminal or ethical problem.The Extortion Problem
Under California Penal Code Section 518, extortion means obtaining property through wrongful use of force or fear. In the demand letter context, the key case is Flatley v. Mauro (2006), where the California Supreme Court held that an attorney’s demand letter threatening to publicly accuse the recipient of rape and report him to authorities unless he paid a large settlement constituted criminal extortion and was not protected legal activity. California Rule of Professional Conduct 3.10 prohibits attorneys from threatening criminal, administrative, or disciplinary charges to gain advantage in a civil dispute. Even if you’re not an attorney, this principle provides good guidance: don’t explicitly condition your silence about alleged crimes or regulatory violations on payment. Generally safe language: “If we cannot resolve this matter informally, I will pursue all appropriate civil remedies, including filing a breach of contract claim in [court/arbitration forum].” “I am prepared to seek all remedies available under our Agreement and applicable law, including damages and attorney’s fees.” “This is a civil settlement demand. If not resolved, I will initiate litigation to enforce my contractual rights.” Risky language that can constitute extortion: “Pay me $20,000 or I will report you to the IRS for tax fraud and the state attorney general for consumer fraud.” “If you don’t refund my money, I will file complaints with your professional licensing board and ensure you can never work in this industry again.” “Settle this by Friday or I’m going to every review site and social media platform to expose you as a scam artist, and I’ll make sure your business is destroyed.” The distinction is between threatening legitimate civil remedies versus threatening criminal prosecution, regulatory complaints, or reputational destruction as leverage for payment. You can certainly say you’re considering “all available remedies” or that you “may pursue appropriate complaints with regulatory bodies,” but avoid explicit quid pro quo: “Pay or I’ll report you.” A safe middle ground: “This letter addresses civil contractual claims only. Separate from this demand, I am evaluating whether your conduct warrants complaints to [relevant regulatory body], which I may pursue independently regardless of how this civil matter is resolved.”Defamation Risks
Defamation—libel for written statements, slander for spoken—involves false statements that harm someone’s reputation. Truth is an absolute defense to defamation, but you still want to be careful about how you characterize the vendor’s conduct in your demand letter. Stick to verifiable facts and clearly label opinions as opinions. Compare these approaches: Factual and safe: “You received payment of $15,000 on August 1, 2025. As of November 19, 2025, you have not delivered the contracted marketing materials listed in Exhibit A.” “The application delivered on October 30 crashes when users attempt to process payments, as shown in the attached error logs and screen recordings.” Potentially defamatory: “You are a scam artist who deliberately defrauds clients.” “Your company is a criminal enterprise that steals money from small businesses.” “You have a history of ripping off clients and should be in prison.” The first set states objective facts that can be proven with documentation. The second set makes sweeping character accusations that may be false and are stated as facts rather than opinions. Even if you believe them to be true, avoid this language unless you have ironclad evidence and are prepared to prove it in court. Use neutral framing language: “Our records show…” “According to the attached invoices…” “The evidence indicates…” “I understand that…” These phrases make clear you’re stating your position based on evidence, not making absolute declarations.Maintaining Professional Tone
Emotion is natural when someone has taken your money and breached your trust. But angry, insulting, or threatening language weakens your position and can create legal liability. Keep the tone businesslike and focused on facts, contract terms, and remedies. Let the evidence speak for itself. If you’re too angry to write a dispassionate letter, draft it, wait 24 hours, and revise before sending. Or hire an attorney to write it for you—attorney-signed demand letters often carry more weight and ensure you stay within legal boundaries.Delivery Method Matters
Check your contract’s notice provisions to determine required delivery methods. Many contracts specify certified mail, courier service, or email to specific addresses. Follow these requirements exactly. Best practice: send the letter via multiple methods for redundancy. Email it (with read receipt if possible), send it via certified mail with return receipt requested, and consider also sending via a courier service like FedEx or UPS that provides tracking and delivery confirmation. This creates a clear record of when the vendor received the demand. If your contract requires a specific method but you also want the speed of email, send the email and note in it: “This demand letter is also being sent via [certified mail/courier] as required by Section X of our Agreement.”Free Template: Demand Letter for Service Agreement Breach
Here’s a plug-and-play template you can customize for your situation. Replace the bracketed text with your specific information.
[YOUR NAME]
[Your Company Name]
[Your Address]
[Your Phone]
[Your Email]
[Date]
Via Email and Certified Mail
[Recipient Name]
[Recipient Title]
[Company Name]
[Address]
Re: Demand Regarding Breach of Service Agreement dated [Contract Date]
Dear [Recipient Name],
I am writing to address significant issues that have arisen under our Service Agreement dated [date] regarding your provision of [marketing/development/consulting] services. Despite multiple attempts to resolve these issues informally, your company has failed to perform its contractual obligations. This letter serves as formal notice of breach and provides a final opportunity to resolve this matter without legal action.
BACKGROUND
On [date], we entered into a [Service Agreement/Statement of Work] under which you agreed to provide [brief description of services]. Under Section [__] of the Agreement, you specifically agreed to [key obligations: deliverables, deadlines, quality standards]. In exchange, I paid [amount] on [date(s)].
BREACH OF CONTRACT
[Choose relevant section(s) below and customize:]
For Non-Performance:
To date, aside from [minimal work performed, if any], you have not delivered the contracted services or any usable work product. The following deliverables specified in [Exhibit/Section] remain undelivered: [list key missing deliverables].
For Missed Deadlines:
Section [__] of the Agreement required completion of [milestone/deliverable] by [date]. As of [current date], this milestone remains incomplete, despite my prior requests for updates on [dates]. [If applicable: The Agreement specifies that time is of the essence, making timely performance a material term.]
For Defective Work:
The [deliverables] you provided on [date] fail to meet the specifications in [Section/Exhibit]. Specifically: [numbered list of 3-4 specific, objective defects with reference to contract requirements].
DAMAGES
As a direct result of your breach, I have suffered the following damages:
- $[amount] paid for services that were not delivered or were materially defective;
- $[amount] in costs to engage a replacement provider to complete/redo the work [if applicable];
- $[amount] in [lost business opportunities/additional costs/other measurable harm] directly caused by your breach.
- A [full/partial] refund of $[amount] representing [payment for undelivered services/unusable work];
- [If applicable: Immediate transfer of all project assets, including [list: source code, credentials, access to accounts, raw files, work product, etc.]];
- [If applicable: Reimbursement of $[amount] in [replacement vendor costs/other documented damages]].
FAQ: 20 Questions About Demand Letters for Service Breaches
1. Will sending a demand letter make the vendor angrier and less likely to settle?
In my experience, the opposite is true. Vendors often ignore informal complaints because there’s no consequence. A formal demand letter signals that you’re serious and prepared to take action. It forces them to evaluate the cost and risk of continued non-response. Most businesses would rather settle a legitimate dispute than face litigation or arbitration costs.2. Can I send the demand letter myself or do I need an attorney?
You can absolutely send a demand letter yourself. The template above is designed for self-use. That said, attorney-signed letters often get faster responses because they signal you’ve already engaged counsel and are one step closer to filing. If the amount at stake is substantial (over $25,000), hiring an attorney to write the letter is usually worth the cost.3. Should I attach all my evidence to the demand letter?
Attach key documents that prove the contract terms and the breach—the agreement itself, invoices showing payment, and a few representative examples of the problem (screenshots, test results, etc.). Don’t attach everything you have. You want to show you have evidence without overwhelming the recipient or revealing your entire litigation strategy. Save detailed evidence for discovery if the case proceeds.4. What if my service agreement was mostly conducted through email and text messages instead of a formal written contract?
Email and text exchanges can absolutely form binding contracts. Courts regularly enforce agreements made via email. Gather all relevant messages, organize them chronologically, and highlight the key communications that establish what was promised, what you paid, and what wasn’t delivered. In your demand letter, reference specific messages by date: “As confirmed in your email dated August 3, 2025, you agreed to deliver…”5. The vendor is claiming they did complete the work—how do I handle a factual dispute?
This is where objective evidence matters. If your contract had acceptance criteria or quality specifications, point to how the delivered work fails those standards. Attach test results, expert assessments, or comparisons to the contract requirements. If it’s purely subjective (like “high quality consulting advice”), you have a weaker claim, which is why specific deliverables should always be defined in contracts.6. Can I demand interest on the refund amount?
Check whether your contract includes an interest provision for late payments or breaches. If not, you may be entitled to statutory interest in some jurisdictions (California Civil Code Section 3289 allows 10% interest on certain contract debts). You can include this in your demand: “I also demand interest at the legal rate from the date of breach to the date of payment.”7. What if the vendor offers a partial settlement that’s less than I demanded?
Evaluate it objectively. Consider the cost, time, and uncertainty of litigation or arbitration. A 60-70% recovery through quick settlement may be better than a potentially higher recovery after a year of expensive legal proceedings. Respond professionally: “Thank you for your settlement offer. While I appreciate your willingness to negotiate, the offered amount does not adequately compensate for [specific damages]. I would be willing to settle for $[revised amount] to avoid further proceedings.”8. Can the vendor sue me for sending a demand letter?
Demand letters are protected legal communications as long as they don’t contain false statements made with actual malice or constitute criminal threats. Stick to truthful facts, avoid defamatory characterizations, and don’t make extortionate threats (as discussed in the guardrails section), and you’ll be fine. Vendors rarely sue over demand letters because it’s expensive and discovery would expose their own misconduct.9. Should I send the demand letter to the account manager I worked with or to the company’s CEO/owner?
Send it to the highest-ranking person whose contact information you have—typically the CEO, owner, or general counsel. Also copy your account manager and any other relevant contacts. You want decision-makers to see it, not have it buried by the same person who created the problem. Check your contract for a specified address for legal notices and use that as well.10. What if the service provider is a freelancer or solo consultant rather than a company?
The process is the same. Individual service providers can breach contracts just like companies. In some ways, demands to individuals are more effective because there’s no bureaucracy—the person who breached is the same person who receives the letter and can make the decision to settle. Be professional but firm in the same way you would with a company.11. Can I post about this dispute on social media or review sites while the demand letter is pending?
Legally, you can post truthful reviews. Practically, it’s usually better to wait until after the demand period expires. If you post while demanding money, it can look like extortion (“Pay me or I’ll trash you online”). If your demand fails and you then post an accurate, factual review of your experience, you’re on much stronger ground. Truth and opinion are protected, but timing matters for perception.12. The vendor is claiming I breached the contract first—how does that affect my demand?
This is a common defense. Review the contract carefully and your own performance. Did you provide necessary access, information, or approvals on time? Did you pay invoices as required? If their claim has merit, you may need to address it: “To the extent you contend that my [alleged breach] affected your performance, this claim is without merit because .” If their defense is pretextual, call it out as such.13. Should I include a deadline for payment or just for response to the letter?
Set a deadline for response/acceptance of the demand (typically 10-14 days), and if they agree to pay, set a second deadline for actual payment (typically another 7-10 days). Your demand section should read: “I require your written acceptance of this demand by [date 1], with payment to follow by [date 2].” This prevents them from agreeing in principle and then delaying payment indefinitely.14. What if the vendor is in another state or country?
Check your contract’s governing law and jurisdiction provisions. Most service agreements specify which state’s law applies and where disputes must be resolved. If your contract is silent, the rules are complex (generally the law of where the contract was formed or where the breach occurred, and venue where the defendant resides or does business). For international vendors, enforcement can be challenging but the demand letter process is the same. Mention the governing law in your letter: “Under Section X, this Agreement is governed by California law, and disputes must be resolved in Los Angeles County.”15. Can I recover the cost of hiring a lawyer to write this demand letter?
Generally no, unless your contract has an attorney’s fees provision that covers pre-litigation costs (some do, most don’t). However, if the dispute proceeds to litigation or arbitration and you prevail, many fee-shifting provisions allow you to recover all attorney’s fees incurred from the inception of the dispute, which would include the demand letter drafting. This is another reason to mention the fee provision prominently in your letter—it creates financial pressure to settle.16. What if I don’t know the exact amount of my damages yet?
You can demand a minimum amount you know you’ve lost and reserve the right to additional damages: “I have incurred at least $15,000 in damages consisting of [known losses]. I am still assessing additional damages from [ongoing harm] and reserve the right to pursue these amounts as well.” This is better than delaying the letter while you calculate every dollar—time is often of the essence in preserving evidence and preventing additional harm.17. The vendor is a large company with a legal department—will my letter even be taken seriously?
Large companies settle disputes all the time because litigation is expensive even when they win. Your demand letter should be professional, specific, and evidence-based. Large companies have risk management protocols—if your claim is legitimate and well-documented, their legal team will likely recommend settlement within a reasonable range. Don’t be intimidated by size; follow the process and present your case clearly.18. Can I negotiate after sending the demand, or does sending it lock me into that specific demand?
You can absolutely negotiate. The demand letter opens the conversation. If they respond with “We can offer $X” or “We can complete the work by Y date,” you can counter-offer or accept. The reservation of rights language protects you from claims that the demand letter was your “final offer.” Settlement negotiations are typically confidential and can’t be used against you in court.19. What if the service provider files for bankruptcy after I send the demand letter?
This complicates recovery. If they file bankruptcy, you become a creditor in the bankruptcy proceeding. Your demand letter and documentation will be important in proving your claim. File a proof of claim in the bankruptcy case. You may recover partial payment through the bankruptcy process, though unsecured creditors (which you likely are) often recover little. This is why acting quickly with demand letters is important—before a struggling vendor files bankruptcy.20. Should I send a follow-up if the deadline passes with no response?
Send one brief follow-up email: “My demand letter dated [date] required your response by [deadline]. That deadline has passed without response. I am proceeding to [file arbitration/file a court claim/engage legal counsel]. If you wish to resolve this matter before I take that step, contact me immediately.” Then follow through. Empty threats destroy credibility—if you said you’d take action after the deadline, do it. Otherwise, vendors learn to ignore your demands.Need help with a specific service agreement dispute? I’ve handled numerous of contract breach cases for tech companies, agencies, and consultants. I can review your situation, draft a customized demand letter, or represent you in litigation or arbitration. Schedule a consultation to discuss your options.
Sergei Tokmakov is a California-licensed attorney (CA Bar #279869) since 2011. He represents tech startups, online businesses, and entrepreneurs in service agreement disputes and contract drafting.