Breach of Contract Notice Basics

A Breach of Contract Notice lets someone know that they're not upholding their end of the
bargain. Sometimes you need to explain in detail how they're not fulfilling their side of the deal;
in fact, the contract might even require you to notify them. A Breach of Contract Notice can
help you get things squared away and back within the boundaries of the agreement.
Use the Breach of Contract Notice document if:
You're in a contract with someone who is not performing a specified
term in the agreement.
You manage a company that regularly deals with contracts.
Someone typically doesn't enter into a contract with the intent to breach; unfortunately, you
might need a Breach of Contract Notice if those carefully laid plans don't work out. Contracts
are just a collection of "musts," and one of your musts just might be notifying the other party
when they're not performing. This is a start to getting things fixed, and sometimes it's enough to
get everything back on track. If it's not, providing notice of a breach can be an important first
step in protecting your legal rights moving forward.
It's important that you specifically state how obligations aren't being fulfilled. Is someone under
contract not completing projects on time? Are they not making required meetings or payments?
Whether you'd like to cancel the contract entirely or would still prefer the other party to come
through on their end, it's important to be detailed and accurate. A Breach of Contract Notice can
help you make sure all your bases are covered.
-----------------------------------------If you're in a contract dispute because you think the other party isn't living up to their side of the
bargain, providing a notice of breach is the first formal step in resolving the problem. The
notice, generally in the form of a letter (sometimes referred to as a "demand letter"), explains
why you believe there has been a breach (a failure to perform under the contract) of the contract
(that is, what the other party did or didn't do), and lays out the actions that must be taken next,
either to fix ("cure") the problems or to end the contract and compensate for the damage. Some
notices are quite specific, laying out a detailed course of action and timetable for making things
right. Other notices are less specific, serving primarily as an invitation to talk things over.
Notice of Breach: What to Include
Here's a list of what you should include when sending a notice of breach in a contract dispute.

Make the date clear. One important function of the notice is to create a record of the date when
the breaching party is officially told of the breach. That date may be important if the dispute
ends up in court. Before sending the notice, the non-breaching party should confirm that the
notice is going to the right person, via the proper method.
Check the notice clause. Contracts often have a clause--commonly referred to as a notice
provision--setting forth contact information for each party and how notices should be
communicated. For example, notices may have to be communicated by email, fax, or overnight
mail. Failing to follow these procedures may affect each party's rights. For example, a notice
sent to the wrong address or by the wrong method may not "count" as notice of the breach,
which gives the breaching party more time to cure the problem.
Describe the breach. The notice must indicate what part of the contract was breached. A breach
-- a failure to perform under the contract -- usually comes in one of three flavors: (1) the other
party failed to perform (for example, you haven't been paid or haven't received the goods you
were promised); (2) the other party said that it will not perform its obligations in the future, or
(3) the other party has made it impossible for you to perform your obligations under the
agreement (for example, you were hired to modify a software program, but the company that
hired you won't give you the code you need to do the work).
No matter why the breach occurred, you will need to identify which clauses of the contract are
affected and list them in your letter. If more than one section has been breached, list all of them,
leading with your strongest claims
Make sure it's a "material" breach. You may provide notice for any type of breach, but keep
in mind that courts are most concerned with "material" breaches--actions by the other party that
destroy the value of the contract. Although you can give notice of a "non-material" breach (also
known as a "partial breach," or "immaterial breach"), a non-material breach usually will not end
the agreement. (Learn more about "material" breach of contract in Nolo's article Breach of
Contract: Material Breach)
Offer a "cure." In some cases, it may be too late to fix the problem. If so, the notice serves to
terminate (cancel) the agreement and to seek damages. Much of the time, though, a breach of
contract notice seeks to resolve contractual problems while keeping the agreement in effect. For
that reason, the letter often provides a period of time during which the breaching party can fix
("cure") the breach. Most contracts include a clause establishing the cure period--often 30 days.
Even if it seems like there's no point in offering a cure period, it may be in your best interest.
The other party may be unaware of the problem or may have run into temporary setbacks that
make compliance with the contract terms difficult.
Avoid an emotional tone. The breach of contract notice should have a dispassionate, businesslike tone. Remember, this letter--like all correspondence preceding a lawsuit--could well
become an exhibit to papers filed with the court. A judge or jury won't look kindly on a letter
that is bullying, exaggerated, or melodramatic. Just stick to the facts.

Try to work it out. Before you send the notice--or perhaps at the same time--you should try to
fix the problems informally. This can help you save time, money, and perhaps even your
business relationship. Don't use the notice solely to intimidate the other party as some sort of
business strategy--for example, to threaten a lawsuit in order to get out of a deal that's not as
lucrative as you expected. That approach often backfires, especially if you're bluffing (and are
then drawn into a long legal battle).
Finally, if you and the other party both want to formally end ("discharge") the agreement, it is
best to do that by entering into a separate agreement terminating the contract. This is often done
using a mutual rescission agreement. But if one or both parties have already performed some of
the contractual obligations--for example, a home has been partially constructed--you will need a
more detailed settlement and release.
The Response to a Notice of Breach
After you send your notice of breach, be prepared for one of these responses from the other side
of the contract:
No response. If you don't hear anything within two weeks, send a second letter referring
to your earlier letter. If you don't receive a response to the second letter, it's time to
consult with an attorney. Perhaps a letter on a lawyer's stationery will have better results.
If not, determine (with your attorney's advice) what your next steps should be. (Use
Nolo's Lawyer Directory to find a contracts attorney in your area.)
Get lost. You may receive a response telling you basically to "take a hike" or something
equivalent. For example, "we have reviewed your letter and have determined that our
company is not in breach of the agreement." You should consult with an attorney before
you fire off an angry response; it's always possible that the responding party is correct.
Let's talk. If the responding letter invites you to discuss the matter, then you may be on
your way to resolving the problem. You may wish to consult an attorney for advice on
how to proceed, particularly if you expect to reach a written settlement with the other
party.
You're right; we give up. Congratulations. You won. What happens next depends on
how you want to end things. Depending on the scale or type of breach, you may want to
use a formal settlement agreement. Again, an attorney can help you to wrap things up
properly.