got a demand letter from former vendor — how do I respond without escalating?

i run a small ecomm store. fired a marketing agency in feb because their lead quality was terrible and they kept missing deliverables. paid through january, terminated per the 30-day clause in the MSA. yesterday i got a real-looking demand letter from their attorney claiming i owe $14,200 for "minimum spend commitment" through june.

i don't recall agreeing to any minimum spend. they're saying it's in the SOW exhibit B. i'm digging through my docs but i'm freaking out a little. how do i respond without making things worse?

step 1: do nothing for 24-48 hrs. don't reply yet. don't email them. don't admit anything.

step 2: pull out every PDF, signed page, email about that contract. find exhibit B and READ it. is the minimum spend actually there? was it signed?

step 3: write a calm response acknowledging receipt, disputing the underlying claim with specific reference to facts (e.g. "the MSA section X allows termination for material breach, which we exercised"), and proposing a discussion. NEVER send a hostile reply.

also — minimum spend commitments are notoriously hard to enforce when the vendor was actually breaching SLAs. their leverage is largely the threat of suit, but a "missing deliverables" defense is real.

document EVERY missed deliverable, every late deliverable, every quality issue you raised in writing. that's your counterclaim if this goes to court.

I'm Sergei Tokmakov, California attorney (Bar #279869). The advice above is sound. Adding a bit more structure:

A demand letter is the start of a negotiation, not a verdict. Three core decisions: (1) is the underlying claim valid (read the contract carefully), (2) what's your strongest defense (their material breach is your discharge), (3) what's the cost-benefit of fighting vs. settling.

For amounts in the $10-15k range, litigation costs alone usually exceed the disputed amount, so almost everyone settles. A proper response letter does three things: acknowledges receipt without admission, asserts your defense with specifics, and either (a) offers a small settlement to close the matter, or (b) demands they substantiate before further engagement. Tone matters — calm and factual makes them less inclined to file.

If you want a response letter drafted on attorney letterhead it's $575 flat. Often the existence of a counter-attorney response is enough to make the other side pause and negotiate. Informational only.