A demand letter is often the only communication the other side’s decision-maker reads. Its construction should reflect that.
State the facts, with support. A short chronology with the key documents attached or identified. A letter asserting breach without showing it is easy to dismiss; one attaching the contract clause and the evidence of breach is not.
State the claim precisely. The obligation, the breach, the loss and the calculation. A specific number with a basis is far more effective than a demand for damages to be determined.
Say what is wanted, with a deadline that is realistic.
Calibrate the tone. Overstated letters — threats of criminal referral, personal attacks, wild damages figures — undermine credibility and can create liability, including for extortion in extreme cases and for tortious interference where sent to third parties.
Consider the consequences of sending. It triggers the recipient’s preservation duty and insurance notice, may start a contractual cure period, and may prompt a declaratory judgment action in the recipient’s chosen forum.
Privilege and admissibility. Settlement communications are generally inadmissible to prove liability, but the letter may be used for other purposes. Mark it appropriately and write it assuming a judge will read it.
Follow through. A deadline that passes without consequence teaches the recipient what the next letter is worth.