California Breach of Contract Response Guide

Evaluate Claims | Assert Defenses | Respond Strategically | Protect Your Rights

✍️ Need to Send a Business Breach Demand Letter? See my guides on writing breach of contract demand letters: Distribution/Reseller Disputes | Manufacturing/Supply Issues | Consulting Contracts

Understanding the Breach of Contract Claim Against You

You Have Received a Demand Letter: If you have received a breach of contract demand letter, someone is claiming you failed to fulfill your contractual obligations and is demanding payment, performance, or other relief. Do not ignore this letter. A thoughtful, strategic response can protect your rights, limit your exposure, and potentially resolve the dispute without litigation.

What is Breach of Contract?

A breach of contract occurs when one party fails to perform their obligations under a valid, enforceable agreement without legal excuse. Under California law, the party claiming breach (the plaintiff) must prove all of the following elements:

Element	What Plaintiff Must Prove	Your Defense Opportunity
1. Valid Contract Exists	A binding agreement with mutual consent, consideration, lawful object, and capable parties (Civil Code Sections 1549-1550)	Challenge contract formation, validity, or enforceability
2. Plaintiff's Performance	They performed their own contractual obligations, or were excused from doing so	Show they breached first or failed to perform
3. Your Breach	You failed to perform your contractual duties	Dispute the alleged breach or show legal excuse
4. Damages	They suffered actual harm caused by your breach	Challenge the existence, causation, or amount of damages

Plaintiff's Burden of Proof: The party claiming breach bears the burden of proving each element by a preponderance of the evidence. If they cannot prove even one element, their claim fails. Your response should identify weaknesses in their case and challenge elements they cannot establish.

Common Allegations in Breach of Contract Demand Letters

Review the demand letter carefully to understand exactly what is being alleged. Common claims include:

Non-Performance: You allegedly failed to deliver goods, provide services, or complete work as promised
Defective Performance: You performed, but the work, goods, or services allegedly did not meet contract specifications or quality standards
Late Performance: You allegedly failed to perform by the deadline specified in the contract
Non-Payment: You allegedly failed to pay for goods, services, or work provided to you
Partial Performance: You allegedly completed only part of your obligations
Repudiation: You allegedly communicated that you would not or could not perform

Key Information to Identify in the Demand Letter

Information	Why It Matters
Specific Contract Referenced	Verify this is actually your contract and review the exact terms they are citing
Contract Provisions Cited	Check if the provisions exist and say what they claim
Alleged Breach Date	Determines when statute of limitations started running
Damages Claimed	Evaluate whether damages are reasonable, documented, and legally recoverable
Deadline to Respond	Prioritize timely response to preserve your options
Demand (What They Want)	Understand whether they seek payment, performance, cure, or termination

California Statute of Limitations

The plaintiff must file their lawsuit within the applicable limitations period, or their claim is barred:

Contract Type	Statute of Limitations	Legal Authority
Written Contract	4 years from date of breach	Code of Civil Procedure Section 337
Oral Contract	2 years from date of breach	Code of Civil Procedure Section 339
Contract for Sale of Goods (UCC)	4 years from date of breach	Commercial Code Section 2725

Statute of Limitations Defense: If the alleged breach occurred more than 4 years ago (written contract) or 2 years ago (oral contract), the claim may be time-barred. This is an affirmative defense you must raise. Calculate the time carefully from the date of the alleged breach, not the date of the demand letter.

Material Breach vs. Minor Breach

Not all breaches are equal. The classification affects what remedies the plaintiff can pursue:

Type	Definition	Plaintiff's Remedies
Material Breach	A significant failure that goes to the essence of the contract and substantially defeats its purpose	Can terminate contract, refuse further performance, sue for all damages including lost benefit of bargain
Minor Breach	A less significant failure where the other party still receives substantially what they bargained for	Can only sue for damages caused by the breach; must continue performing their own obligations

Defense Strategy: If your alleged breach was minor (e.g., slight delay, minor defect), the plaintiff may only be entitled to limited damages to correct the deficiency. They cannot terminate the contract or claim lost profits based on a minor breach.

Evaluating Your Position: Did a Breach Actually Occur?

Honest Assessment Required: Before responding, honestly evaluate whether you actually breached the contract. Your response strategy depends on whether the claim has merit. If you did breach, focusing on settlement or damage limitation may be more effective than outright denial.

Step 1: Review the Actual Contract

Locate and carefully review the original contract. Ask yourself:

What exactly did you promise? Review your specific obligations, not what the other party claims you promised
Were there conditions to your performance? Your duty to perform may have been contingent on something the other party failed to do
What were the specifications, deadlines, or quality standards? Compare to what you actually delivered
Were there any amendments or modifications? The terms may have changed from the original agreement
What do the notice, cure, and termination provisions say? Did the other party follow required procedures?

Step 2: Evaluate Whether a Breach Occurred

Question	If Yes	If No
Did you fail to perform as promised?	Consider defenses, excuses, or mitigation	Prepare full denial with evidence of performance
Was your performance defective or late?	Evaluate if breach was material or minor	Document quality and timeliness of your performance
Did you have a valid excuse for non-performance?	Assert applicable defenses (see below)	Consider whether partial admission makes sense
Did the other party breach first?	Assert prior breach defense and counterclaims	Focus on other defenses

Valid Defenses to Breach of Contract

Even if you did not perform, you may have a complete or partial defense:

1. Impossibility of Performance
Performance became objectively impossible due to circumstances beyond your control. Under California law, supervening impossibility may discharge your obligations if: (1) an unexpected event occurred after contract formation, (2) the event made performance impossible or impracticable, (3) the event was not your fault, and (4) you did not assume the risk. Examples: destruction of subject matter, death or incapacity (personal services), illegality (law change prohibiting performance).

2. Frustration of Purpose
The principal purpose of the contract was substantially frustrated by an event neither party could control. Even if performance is technically possible, if the fundamental reason for the contract has been destroyed, you may be excused. Example: Event canceled due to pandemic, making venue rental meaningless.

3. Waiver by the Other Party
The other party waived your obligation through words or conduct. If they accepted late payment without objection, failed to enforce deadlines, or otherwise indicated they would not insist on strict performance, they may have waived their right to claim breach for those issues.

4. Statute of Limitations
If the alleged breach occurred more than 4 years ago (written contract) or 2 years ago (oral contract), the claim is time-barred under California Code of Civil Procedure Sections 337 and 339. You must affirmatively raise this defense.

5. Prior Breach by the Other Party
If the other party materially breached the contract first, you may be excused from further performance. Under California law, a material breach by one party suspends the other party's duty to perform. Document how and when they breached first.

6. Lack of Consideration
If the other party gave nothing of value in exchange for your promise, the contract may be unenforceable for lack of consideration. A gratuitous promise (gift promise) is not binding. California Civil Code Section 1605.

Evaluating Their Damages Claim

Even if breach occurred, the plaintiff must prove they suffered actual damages. Challenge damages that are:

Speculative: Damages must be proven with reasonable certainty, not guesswork
Unforeseeable: Consequential damages are only recoverable if foreseeable at contract formation
Not Mitigated: The plaintiff had a duty to minimize damages; they cannot recover avoidable losses
Excessive: Claimed amounts may exceed actual harm suffered
Not Caused by You: Their losses may have other causes unrelated to any breach

Document Everything: Gather all communications, your copy of the contract, evidence of your performance, evidence of the other party's failures, and anything supporting your defenses. Keep a timeline of relevant events. This documentation will be critical for your response and any potential litigation.

Response Strategies: How to Reply to a Breach of Contract Demand

Choose Your Strategy Wisely: Your response should be strategic, not reactive. Consider the strength of their claim, the strength of your defenses, the amount at stake, your relationship with the other party, and your tolerance for litigation risk and cost.

Strategy 1: Full Denial

When to Use: Use full denial when you have strong grounds to dispute the claim entirely. This includes situations where: (1) no valid contract exists, (2) you fully performed your obligations, (3) the plaintiff breached first, (4) the claim is time-barred, or (5) you have a complete defense such as impossibility.

Elements of Full Denial Response:

Explicitly deny the allegations of breach
State the factual and legal basis for your denial
Cite specific contract provisions or evidence supporting your position
Identify any defenses you are asserting
Demand withdrawal of the claim and reservation of rights
State your intent to defend vigorously if sued

Strategy 2: Partial Admission with Dispute

When to Use: Use this approach when some aspects of the claim may have merit, but other aspects are disputed. For example, you may admit a minor delay occurred but dispute that it was material, or acknowledge a defect but dispute the damages claimed.

Elements of Partial Admission Response:

Acknowledge specific facts you cannot credibly dispute
Dispute exaggerated or false allegations
Explain mitigating circumstances
Challenge the damages calculation
Propose a reasonable resolution based on actual harm

Strategy 3: Counterclaim Assertion

When to Use: If the other party breached the contract first, failed to perform their obligations, or caused you harm, assert counterclaims. This shifts leverage and may result in offset, settlement, or recovery in your favor.

Potential Counterclaims:

Prior Material Breach: They breached first, excusing your performance and entitling you to damages
Failure to Pay: They owe you money under the contract
Defective Performance: Their goods, services, or work was defective
Fraud or Misrepresentation: They induced the contract through false statements
Failure to Mitigate: They failed to minimize damages and now seek to recover avoidable losses from you

Strategy 4: Settlement Negotiation

When to Use: Settlement often makes sense when: (1) some breach occurred, (2) litigation costs would exceed the amount in dispute, (3) you want to preserve the business relationship, (4) both sides have claims against each other, or (5) the outcome at trial is uncertain.

Settlement Negotiation Approaches:

Approach	Description	Best Used When
Lump Sum Payment	Offer a reduced one-time payment to resolve all claims	You have liquidity; they want quick resolution
Payment Plan	Agree to pay the amount owed over time	Cash flow issues; they prefer certainty over litigation
Mutual Release	Both parties release all claims against each other	Both sides have potential claims; clean break desired
Cure Performance	Complete or correct your performance instead of paying damages	You can still perform; they want the benefit of the bargain
Offset	Set off amounts they owe you against amounts you owe them	Both sides have debts to the other

Timing Considerations

When to respond and how quickly:

Respond before the deadline stated in their letter to demonstrate good faith and avoid escalation
Request extension if needed to gather documentation or consult an attorney
Do not ignore the letter - silence may be seen as admission and will likely lead to immediate litigation
Preserve evidence - ensure all relevant documents and communications are retained

Warning: Anything you say in your response can be used against you in litigation. Be factual and professional. Avoid emotional language, threats, or admissions that could harm your position. When in doubt, consult an attorney before responding.

Sample Response Letters

Customize These Templates: These sample letters provide a starting point. Modify them to fit your specific situation, insert accurate facts, and ensure all statements are truthful. Consider having an attorney review your response before sending, especially for significant claims.

Sample 1: Full Denial Response

[Your Name] [Your Address] [City, State ZIP] [Phone Number] [Email Address] [Date] VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED [and via email to: sender@email.com] [Sender Name] [Sender Address] [City, State ZIP] RE: RESPONSE TO DEMAND LETTER DATED [DATE] Alleged Breach of [Contract Name/Description] Dear [Sender Name]: I am in receipt of your letter dated [Date] alleging that I breached the [Agreement Name] dated [Contract Date] (the "Agreement"). I have reviewed your allegations carefully and must respectfully but firmly deny them. DENIAL OF BREACH Your claim that I breached the Agreement is without merit for the following reasons: 1. FULL PERFORMANCE: Contrary to your allegations, I fully performed all of my obligations under the Agreement. Specifically, [describe your performance, e.g., "I completed all contracted work by the deadline specified in Section 3.1," "I delivered all goods conforming to the specifications in Exhibit A," "I made all required payments as documented by the attached records"]. 2. [ALTERNATIVE: NO VALID CONTRACT]: The alleged Agreement is unenforceable because [state reason, e.g., "it was never signed by both parties," "it lacks consideration," "it violates the statute of frauds," "mutual consent was lacking"]. 3. [ALTERNATIVE: YOUR PRIOR BREACH]: You materially breached the Agreement first by [describe their breach, e.g., "failing to make the deposit payment required under Section 2," "failing to provide specifications as required by Section 4"]. Your breach excused my further performance under California law. 4. [ALTERNATIVE: STATUTE OF LIMITATIONS]: Your claim is time-barred. The alleged breach occurred on [date], more than [4 years/2 years] ago. Under California Code of Civil Procedure Section [337/339], your claim expired on [date]. DOCUMENTARY EVIDENCE I have retained the following documentation supporting my position: - [List relevant documents, e.g., "Signed delivery receipts dated [dates]"] - [E.g., "Email correspondence confirming your acceptance of the work"] - [E.g., "Bank records showing timely payment"] - [E.g., "Photographs of completed work dated [date]"] DEMAND I demand that you immediately withdraw your claim and cease making false allegations of breach. Your demand letter is without factual or legal basis, and I will vigorously defend against any lawsuit you may file. RESERVATION OF RIGHTS I reserve all rights and remedies available to me under law, including the right to seek recovery of attorney's fees and costs if I am forced to defend against a baseless lawsuit, as well as claims for abuse of process or malicious prosecution if warranted. If you wish to discuss this matter, I am willing to do so in good faith. However, I will not pay or perform based on false allegations. Sincerely, [Your Signature] [Your Printed Name] Enclosures: - [List supporting documents you are including]

Sample 2: Partial Acceptance with Counterclaim

[Your Name] [Your Address] [City, State ZIP] [Phone Number] [Email Address] [Date] VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED [Sender Name] [Sender Address] [City, State ZIP] RE: RESPONSE TO DEMAND LETTER DATED [DATE] [Contract Name/Description] - Counterclaim Asserted Dear [Sender Name]: I have received your demand letter dated [Date] regarding the [Agreement Name] dated [Contract Date] (the "Agreement"). While I acknowledge certain facts in your letter, I dispute others and have significant counterclaims against you. PARTIAL ACKNOWLEDGMENT I acknowledge that [state what you are acknowledging, e.g., "the project was completed approximately two weeks after the original deadline specified in the Agreement," "certain aspects of the delivered work required correction"]. However, this partial acknowledgment is subject to the following important context and qualifications: 1. YOUR CONDUCT CAUSED THE DELAY/ISSUE: [Explain, e.g., "The delay was directly caused by your failure to provide the design specifications required under Section 4.2 until [date], three weeks past the deadline specified in the Agreement. My completion date was reasonable given this delay."] 2. THE BREACH WAS MINOR: Even accepting your characterization, any deviation from the contract terms was minor and did not deprive you of the substantial benefit of the bargain. Under California law, you are entitled only to damages to correct the specific deficiency, not termination or consequential damages. 3. DAMAGES ARE OVERSTATED: Your claimed damages of $[amount] are grossly inflated. The reasonable cost to address [the issue] is approximately $[amount], and I dispute any consequential damages as unforeseeable and unproven. MY COUNTERCLAIMS AGAINST YOU Your own conduct has resulted in the following claims I hold against you: 1. UNPAID BALANCE: You owe me $[amount] under the Agreement for [work completed/goods delivered/services provided]. Section [X] of the Agreement required payment of this amount by [date]. You have failed to pay. 2. YOUR BREACH: You breached the Agreement by [describe their breach, e.g., "failing to provide access to the work site as required," "failing to make progress payments," "changing specifications without agreeing to a change order"]. This breach caused me damages of $[amount]. 3. [Additional counterclaims as applicable] TOTAL DUE FROM YOU: $[amount] PROPOSED RESOLUTION Given that both parties have claims against the other, I propose the following resolution: [Option 1 - Offset]: My counterclaim of $[amount] exceeds your claim. I propose mutual releases, with you paying me the net difference of $[amount] within 30 days. [Option 2 - Mutual Walk-Away]: Given the disputes on both sides, I propose that we exchange mutual releases and each party bear their own costs, resolving all claims. [Option 3 - Negotiated Payment]: I am willing to [complete specified cure work / pay $X] in exchange for your full release of all claims and your payment of $[counterclaim amount] owed to me. RESPONSE REQUESTED Please respond to this letter within fifteen (15) days if you wish to discuss a resolution. If I do not hear from you, or if you proceed with litigation, I will assert my defenses and counterclaims vigorously, and will seek to recover my attorney's fees pursuant to [Section X of the Agreement / California law]. Sincerely, [Your Signature] [Your Printed Name] Enclosures: - Documentation of counterclaims - Records of unpaid invoices - Evidence of your breach

Sample 3: Settlement Negotiation Response

[Your Name] [Your Address] [City, State ZIP] [Phone Number] [Email Address] [Date] VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED [and via email to: sender@email.com] [Sender Name] [Sender Address] [City, State ZIP] RE: RESPONSE TO DEMAND LETTER - SETTLEMENT PROPOSAL [Contract Name/Description] Dear [Sender Name]: I have received your demand letter dated [Date] regarding the [Agreement Name] dated [Contract Date]. While I do not agree with all of your characterizations of the situation, I am writing to propose a practical resolution that avoids the cost and uncertainty of litigation for both of us. COMPROMISE OFFER In the interest of resolving this dispute amicably, and without admitting liability, I am prepared to offer the following: [Option A - Lump Sum Payment] I will pay you the sum of $[amount] within [15/30] days of your acceptance of this offer, in full and final settlement of all claims arising from the Agreement. This represents a compromise of your demand of $[their demand amount] and my assessment that your actual recoverable damages, if any, are substantially lower. [Option B - Payment Plan] I will pay you the sum of $[amount] according to the following schedule: - $[amount] upon execution of settlement agreement - $[amount] on [date] - $[amount] on [date] - Final payment of $[amount] on [date] [Option C - Performance Cure] Instead of monetary payment, I am prepared to [describe cure work, e.g., "complete the remaining punch list items identified in your letter," "replace the defective components," "provide the services that you allege were not provided"] at no additional cost to you, within [X] days of your acceptance. CONDITIONS OF SETTLEMENT This offer is contingent on the following: 1. MUTUAL RELEASE: Both parties will execute a mutual release of all claims arising from or related to the Agreement. 2. CONFIDENTIALITY: The terms of the settlement will remain confidential. 3. NO ADMISSION: This offer is made for settlement purposes only and does not constitute an admission of liability. Evidence of this offer is inadmissible under California Evidence Code Section 1152. 4. FULL SATISFACTION: Upon completion of the settlement terms, you agree that all claims are fully satisfied and you will not pursue any further action. RATIONALE I am making this offer because: 1. Litigation is expensive and time-consuming for both parties 2. The outcome of any lawsuit is uncertain 3. [I value our business relationship and hope to preserve it / A clean resolution allows both of us to move forward] 4. This offer represents a fair compromise given the disputed facts and competing claims RESPONSE DEADLINE This offer will remain open for fifteen (15) days from the date of this letter. If I do not receive your acceptance by [specific date], this offer is withdrawn, and I reserve all rights to defend against your claims and assert any counterclaims. If you are interested in discussing alternative settlement terms, I am open to a conversation. Please contact me at [phone/email] to arrange a time. I hope we can resolve this matter without further escalation. Sincerely, [Your Signature] [Your Printed Name] This letter is a settlement communication protected under California Evidence Code Section 1152 and Federal Rule of Evidence 408. It is inadmissible in any legal proceeding.

Legal Defenses to Breach of Contract Claims

Affirmative Defenses: Beyond simply denying the breach, California law provides several affirmative defenses that can defeat or reduce a breach of contract claim. You must raise these defenses; the court will not apply them automatically.

1. Statute of Frauds (Civil Code Section 1624)

Certain contracts must be in writing to be enforceable. If the alleged contract falls into one of these categories but is not in writing, it may be unenforceable:

Contract Type Requiring Writing	Examples
Agreements for sale of real property	Land purchase contracts, real estate options
Agreements that cannot be performed within one year	Multi-year service contracts, long-term leases
Promises to pay another's debt (suretyship)	Personal guarantees, co-signer agreements
Agreements in consideration of marriage	Prenuptial agreements
Contracts for sale of goods over $500 (Commercial Code)	Large inventory purchases, equipment sales

Exceptions to Statute of Frauds: Even if a writing is required, the contract may still be enforceable if: (1) there was part performance (especially for real estate), (2) the defendant admitted the contract exists, (3) goods were specially manufactured, or (4) estoppel applies due to reasonable reliance.

2. Unconscionability

A contract or clause may be unenforceable if it was unconscionable at the time it was made. California courts look for both:

Procedural Unconscionability: Unfairness in the bargaining process - unequal bargaining power, take-it-or-leave-it terms, hidden terms, lack of meaningful choice, fine print, or lack of opportunity to read and understand
Substantive Unconscionability: Unfairness in the terms themselves - terms so one-sided as to shock the conscience, terms that unreasonably favor one party

Sliding Scale: California uses a sliding scale approach. The more procedural unconscionability is present, the less substantive unconscionability is required, and vice versa. Both elements must be present to some degree.

3. Duress

A contract is voidable if your consent was obtained through duress. California Civil Code Section 1569 defines duress as:

Physical Duress: Unlawful confinement or threat of violence to person, family, or property
Economic Duress: Wrongful threat that leaves no reasonable alternative but to agree (e.g., "Sign this or I will breach our existing contract and destroy your business")
Effect: The threat must have actually induced your consent - you would not have agreed otherwise
Timing: Must be raised promptly after the duress ends; delay may constitute ratification

4. Fraud and Misrepresentation

If you were induced to enter the contract through false statements, the contract may be voidable:

Type	Elements	Remedy
Intentional Misrepresentation (Fraud)	False statement of material fact, knowledge of falsity, intent to induce reliance, justifiable reliance, resulting damages	Rescission of contract, damages including punitive damages
Negligent Misrepresentation	False statement of material fact, no reasonable ground for believing truth, intent to induce reliance, justifiable reliance, damages	Rescission or damages
Concealment	Failure to disclose material facts when there was a duty to disclose	Rescission or damages

Fraud Defense Example: If the other party told you their product had a specific feature that was critical to your decision, and it did not have that feature, you may be able to rescind the contract and recover your payments. Document the misrepresentation and your reliance on it.

5. Failure to Mitigate Damages

Under California law, the injured party has a duty to take reasonable steps to minimize damages:

The Rule: A party cannot recover damages that could have been avoided through reasonable effort and without undue risk, expense, or humiliation
Burden of Proof: The defendant (you) must prove the plaintiff failed to mitigate and the amount of avoidable damages
Reasonableness Standard: The plaintiff need not take extraordinary measures; only reasonable steps are required
Examples: Failure to seek replacement goods after seller's breach; failure to seek new employment after wrongful termination; failure to relet premises after tenant's abandonment

6. Lack of Damages or Causation

Even if breach occurred, the plaintiff must prove actual damages caused by the breach:

No Actual Harm: If the breach caused no damage (e.g., late delivery that did not affect the plaintiff), nominal damages only
Speculative Damages: Damages must be proven with reasonable certainty - California Civil Code Section 3301
Causation: Plaintiff must prove the damages were caused by your breach, not other factors
Benefit Received: If plaintiff received substantial benefit despite the breach, damages are reduced accordingly

7. Waiver and Estoppel

The other party may have waived their right to claim breach:

Express Waiver: Written or verbal statement relinquishing the right to enforce
Implied Waiver: Conduct inconsistent with intent to enforce (e.g., accepting late payments without objection)
Estoppel: If they led you to believe they would not enforce, and you relied on that belief to your detriment, they may be estopped from claiming breach
Course of Dealing: A pattern of non-enforcement may establish waiver

8. Accord and Satisfaction

If you previously reached an agreement to settle the dispute with a different arrangement, and you performed that arrangement, the original claim is extinguished:

Accord: A new agreement to accept different performance in satisfaction of the original obligation
Satisfaction: Performance of the accord
Example: If they agreed to accept $5,000 in full satisfaction of a $10,000 debt, and you paid the $5,000, the original claim is discharged

Attorney Services

Received a Breach of Contract Demand Letter?

Being accused of breach of contract can be stressful and financially threatening. I help individuals and businesses evaluate claims against them, assert valid defenses, negotiate favorable settlements, and defend against litigation. Do not respond without understanding your rights and options.

How I Can Help

Claim Evaluation: I analyze the demand letter and your contract to assess the strength of the claim against you and identify weaknesses in their case
Defense Strategy: I identify all applicable defenses and develop a strategic response plan tailored to your situation
Response Drafting: I prepare professional, legally sound response letters that protect your interests and preserve your options
Counterclaim Assessment: If you have claims against the other party, I identify and assert them to shift leverage in your favor
Settlement Negotiation: I negotiate with the other party to achieve favorable settlements that minimize your exposure
Litigation Defense: If sued, I defend your interests in court, asserting all defenses and counterclaims
Damage Limitation: Even if some liability exists, I work to minimize the damages you may owe

When to Consult an Attorney

Consider consulting an attorney if:

The amount claimed against you is significant (over $10,000)
The demand letter comes from an attorney or a large company
You are unsure whether you breached the contract
You have potential counterclaims against the other party
The contract contains an arbitration clause, attorney's fees provision, or complex terms
You are concerned about reputation damage or ongoing business relationships
You have been served with a lawsuit or the deadline to respond is approaching
The contract involves real estate, significant assets, or ongoing obligations

What to Bring to Your Consultation

The demand letter you received
The original contract and any amendments
All correspondence with the other party (emails, texts, letters)
Evidence of your performance (invoices, receipts, delivery records, photos)
Evidence of any problems with the other party's performance
Payment records (what you paid, what they paid)
Timeline of relevant events
Any prior demands or complaints from either party

Schedule a Consultation

Book a call to discuss your situation. I will review the claim against you, explain your legal options, and advise on the best strategy for responding and protecting your interests.

Contact Information

Email: owner@terms.law

Frequently Asked Questions

First, do not panic and do not ignore the letter. Carefully read the entire letter and note any deadlines. Locate your copy of the contract being referenced and review its terms. Gather any documentation related to your performance and communications with the other party. Evaluate whether the allegations have merit. Consider consulting an attorney, especially if the amount claimed is significant. Prepare a written response before the deadline - even if you need more time, acknowledge receipt and request an extension rather than staying silent.

No, ignoring the demand letter is almost always a mistake. Even if you believe the claim is completely without merit, failing to respond may: (1) result in an immediate lawsuit, (2) eliminate any chance of early resolution, (3) be used against you in court to suggest you had no defense, and (4) miss an opportunity to assert your own claims. A written denial response documents your position and may discourage litigation. If the claim truly is baseless, a well-crafted response explaining why may end the matter.

In California, the statute of limitations for breach of a written contract is 4 years from the date of breach (Code of Civil Procedure Section 337). For oral contracts, it is only 2 years (Code of Civil Procedure Section 339). The clock starts running when the breach occurs, not when it is discovered. If the limitations period has passed, you have a complete defense to the claim - but you must affirmatively raise this defense. Calculate carefully from the date of the alleged breach to determine if the claim is time-barred.

Not necessarily. Even if you did fail to perform as promised, you may have defenses that excuse your breach (impossibility, prior breach by the other party, waiver) or reduce your liability (damages are overstated, plaintiff failed to mitigate). Before admitting anything, evaluate all potential defenses. If you do have some liability, a strategic partial admission combined with challenges to damages and counterclaims may result in a much better outcome than a full admission. Consider consulting an attorney to assess your options before responding.

Yes. If the other party breached the contract first, owes you money, or caused you harm, you can assert counterclaims. Common counterclaims include: prior material breach that excused your performance, failure to pay amounts owed to you, defective performance on their part, fraud or misrepresentation that induced the contract, and failure to mitigate damages. Counterclaims can offset their claims, give you negotiating leverage, and potentially result in a net recovery in your favor even if you have some liability.

Common defenses include: (1) No valid contract exists - lack of mutual consent, consideration, or capacity; (2) Statute of frauds - required writing is missing; (3) Statute of limitations - claim is time-barred; (4) You fully performed - no breach occurred; (5) Prior breach by plaintiff - they breached first; (6) Impossibility or impracticability - unforeseen events made performance impossible; (7) Waiver - they waived their right to enforce; (8) Unconscionability - terms are unenforceable; (9) Duress or fraud - your consent was coerced or induced by misrepresentation; (10) Failure to mitigate - they failed to minimize damages.

This depends on several factors: the strength of the claim against you, the strength of your defenses, the amount at stake, litigation costs (attorney fees, court costs, time), your tolerance for risk and uncertainty, whether you have counterclaims, and the value of any ongoing business relationship. Settlements often make sense when the cost of litigation would exceed any savings, the outcome is uncertain, or both sides have exposure. Fighting makes sense when the claim is clearly baseless, you have strong defenses, or the amount at stake justifies the litigation investment.

Responding to Breach of Contract Claims in California

Key Defenses Under California Law

Strategic Response Options

Related Resources

Responding to Breach of Contract Claims in California

Key Defenses Under California Law

Strategic Response Options