Breach of Contract Demand Letter - Alaska

DEMAND LETTER - BREACH OF CONTRACT

State of Alaska

[________________________________]
Attorneys at Law
[________________________________]
[________________________________], Alaska [____]
Telephone: [________________________________]
Facsimile: [________________________________]
Email: [________________________________]
Alaska Bar Association No. [________________________________]

SENT VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
AND VIA FIRST-CLASS MAIL

[__/__/____]

[________________________________]
[________________________________]
[________________________________]
[________________________________], [____] [____]

Re: Formal Demand for Cure of Material Breach of Contract and Payment of Damages
Contract Date: [__/__/____]
Our Client: [________________________________]
Subject Matter: [________________________________]
Demand Amount: $[________________________________]

Dear [________________________________]:

This firm represents [________________________________] ("our Client") in connection with the above-referenced agreement dated [__/__/____] (the "Contract") between our Client and [________________________________] ("you" or "Breaching Party"). We write to formally notify you of your material breach of the Contract and to demand immediate cure and full compensation for all resulting damages.

THIS IS A FORMAL DEMAND. ALASKA RULE OF CIVIL PROCEDURE 82 PROVIDES FOR MANDATORY ATTORNEY FEE AWARDS TO PREVAILING PARTIES. IF THIS MATTER PROCEEDS TO LITIGATION AND OUR CLIENT PREVAILS, YOU WILL BE LIABLE FOR A SUBSTANTIAL PORTION OF OUR CLIENT'S ATTORNEY FEES IN ADDITION TO ALL DAMAGES, PREJUDGMENT INTEREST, AND COSTS. THIS FEE EXPOSURE IS A COMPELLING REASON TO RESOLVE THIS MATTER PROMPTLY.

I. FACTUAL BACKGROUND AND CONTRACTUAL RELATIONSHIP

On or about [__/__/____], our Client and you entered into the Contract for [________________________________]. The material terms of the Contract include, but are not limited to:

☐ [________________________________]
☐ [________________________________]
☐ [________________________________]
☐ [________________________________]

Our Client has fully performed all obligations under the Contract, or has tendered performance, including but not limited to:

☐ [________________________________]
☐ [________________________________]
☐ [________________________________]

Despite our Client's full and timely performance, you have materially breached the Contract in the following respects:

A. First Breach

Contract Provision Breached: [________________________________]
Nature of Breach: [________________________________]
Date of Breach: [__/__/____]
Impact on Our Client: [________________________________]

B. Second Breach

Contract Provision Breached: [________________________________]
Nature of Breach: [________________________________]
Date of Breach: [__/__/____]
Impact on Our Client: [________________________________]

C. Additional Breaches (if applicable)

☐ [________________________________]
☐ [________________________________]

II. APPLICABLE ALASKA LAW - BREACH OF CONTRACT

A. Elements of Breach of Contract

Under Alaska law, the elements of a breach of contract claim are: (1) the existence of a contract; (2) breach of a duty imposed by the contract; and (3) resulting damages. Integrated Resources, Inc. v. Justice Resources, 789 P.2d 365 (Alaska 1990); Kynell v. Hubbard, 22 P.3d 463 (Alaska 2001).

Our Client satisfies each of these elements. The Contract is a valid and enforceable agreement. You have failed to perform your contractual duties. Our Client has suffered quantifiable damages as detailed below.

B. Material Breach

Your breach is material, going to the essence of the Contract. Under Alaska law, a material breach is one that substantially defeats the purpose of the agreement. See Vachon v. Tomich, 291 P.3d 341 (Alaska 2012). A material breach excuses the non-breaching party from further performance and entitles that party to all available remedies. The materiality of a breach is determined by examining the totality of the circumstances, including the extent to which the injured party has been deprived of the expected benefit, the likelihood of cure, and the breaching party's good faith.

C. Implied Covenant of Good Faith and Fair Dealing

Alaska law implies a covenant of good faith and fair dealing in every contract. Guin v. Ha, 591 P.2d 1281 (Alaska 1979). This covenant requires that neither party do anything to unfairly interfere with the right of the other to receive the benefits of the agreement. Your conduct in breaching the Contract also constitutes a violation of this implied duty.

D. Specific Performance (if applicable)

☐ Check if applicable: Where monetary damages are inadequate, Alaska courts may order specific performance. Specific performance is available as an equitable remedy when the subject matter is unique or damages cannot adequately compensate the injured party.

III. UCC PROVISIONS (If Contract Involves Sale of Goods)

☐ Check if applicable: If this Contract involves the sale of goods, the Alaska Uniform Commercial Code (AS Title 45, Chapter 02) applies. Under AS 45.02.725, an action for breach of a sales contract must be commenced within four (4) years after the cause of action has accrued. Additional UCC remedies include:

• Cover damages under AS 45.02.712
• Market price damages under AS 45.02.713
• Incidental and consequential damages under AS 45.02.715
• Specific performance under AS 45.02.716 (for unique goods)
• Right to reject nonconforming goods under AS 45.02.601
• Revocation of acceptance under AS 45.02.608

IV. DAMAGES

Our Client has suffered the following damages as a direct, proximate, and foreseeable result of your breach:

A. Direct/Compensatory Damages

Under Alaska law, the measure of damages for breach of contract is the amount necessary to place the injured party in the position it would have occupied had the contract been fully performed. See Alaskan Crude Corp. v. State, 309 P.3d 1249 (Alaska 2013).

B. Consequential Damages

Consequential damages are recoverable under Alaska law where they were within the contemplation of the parties at the time of contracting or were a natural and foreseeable consequence of the breach.

C. Incidental Damages

D. Prejudgment Interest

Under AS 09.30.070, prejudgment interest accrues at the rate set annually by the Commissioner of Revenue. The current rate is 10.5% per annum (this rate is adjusted annually and should be verified at the time of filing). Prejudgment interest is a matter of right on liquidated claims in Alaska.

E. Attorney Fees Under Alaska Rule 82

Alaska Rule of Civil Procedure 82 provides for mandatory attorney fee awards to the prevailing party. Unlike most jurisdictions that follow the "American Rule," Alaska requires the losing party to contribute to the winner's attorney fees. The schedule for contested cases with a money judgment is:

This fee exposure is substantial and should be a significant factor in your decision to resolve this matter before litigation. The court may also vary the fee award based on the complexity of the case, the reasonableness of the claims and defenses, and other factors under Rule 82(b)(3).

F. Total Demand Summary

V. STATUTE OF LIMITATIONS

Under AS 09.10.053, a person may not bring an action for breach of a contract unless commenced within three (3) years after the cause of action accrues. The cause of action accrues when the breach occurs.

☐ Standard contract claims: Three (3) years under AS 09.10.053.
☐ Sale of goods under UCC: Four (4) years under AS 45.02.725.
☐ Municipal contracts: Six (6) years under AS 09.10.120 (if applicable).

The breach at issue occurred on or about [__/__/____]. This demand and any subsequent litigation are timely filed well within the applicable limitations period.

VI. MITIGATION OF DAMAGES

Our Client has taken reasonable steps to mitigate damages, including but not limited to:

☐ [________________________________]
☐ [________________________________]
☐ [________________________________]

Notwithstanding these mitigation efforts, our Client has sustained the damages set forth above. Under Alaska law, the non-breaching party has a duty to exercise reasonable diligence to minimize damages, but this duty does not require extraordinary efforts or unreasonable expense.

VII. DEMAND

Within thirty (30) calendar days of your receipt of this letter, you must take the following actions:

☐ Cure the breach by performing the following specific actions:
- [________________________________]
- [________________________________]

AND/OR

☐ Pay the total sum of $[________________________________] representing all compensatory, consequential, and incidental damages, together with accrued prejudgment interest.

Payment shall be made by certified check or wire transfer payable to [________________________________] and delivered to:

[________________________________]
[________________________________]
[________________________________], Alaska [____]

If you wish to discuss a structured resolution, please contact the undersigned within fourteen (14) calendar days to arrange a settlement conference.

VIII. CONSEQUENCES OF NON-COMPLIANCE

If you fail to cure the breach and/or remit full payment within the time specified above, our Client will, without further notice:

1. File suit in the Superior Court for the State of Alaska, [________________________________] Judicial District (or the United States District Court for the District of Alaska, if federal jurisdiction exists);
2. Seek prejudgment interest at 10.5% per annum (or the then-current statutory rate) under AS 09.30.070;
3. Recover attorney fees under Alaska Rule of Civil Procedure 82 - this is a mandatory fee-shifting provision that will result in substantial additional liability;
4. Pursue all post-judgment remedies available under Alaska law, including but not limited to:
   - Wage garnishment under AS 09.38.030 (25% of disposable earnings or the amount exceeding weekly exemption of $473, whichever is less)
   - Bank account levy
   - Real and personal property liens
   - Execution on non-exempt assets
5. Seek costs of litigation under Alaska R. Civ. P. 79; and
6. Pursue any and all other remedies available at law or in equity, including specific performance, injunctive relief, and declaratory relief.

IX. DOCUMENT PRESERVATION NOTICE

YOU ARE HEREBY PLACED ON NOTICE that you must immediately preserve all documents, electronically stored information, and tangible items that relate in any way to the Contract, the subject matter thereof, and the breach described herein. This includes but is not limited to:

☐ All correspondence (email, text messages, letters, memoranda)
☐ All contracts, amendments, change orders, and related documents
☐ All financial records, invoices, receipts, and payment records
☐ All internal communications regarding the Contract or our Client
☐ All electronically stored information, including metadata
☐ All photographs, recordings, and other media

Failure to preserve relevant evidence may result in spoliation sanctions under Alaska law, including adverse inference instructions, monetary sanctions, and other penalties as the court deems appropriate.

X. RESERVATION OF RIGHTS

This letter is not intended to be, and shall not be construed as, a waiver of any rights, claims, or remedies available to our Client under the Contract, at law, or in equity. Our Client expressly reserves all such rights, claims, and remedies, whether or not specifically referenced herein.

Nothing in this letter shall be construed as an admission of liability by our Client or as an acknowledgment that any claim you may assert against our Client has merit.

Govern yourself accordingly.

Very truly yours,

[________________________________]

By: _______________________________
[________________________________]
Alaska Bar Association No. [________________________________]
Telephone: [________________________________]
Email: [________________________________]

Enclosures:
☐ Exhibit A - Copy of the Contract
☐ Exhibit B - Itemized Damage Calculations
☐ Exhibit C - Correspondence Regarding Breach
☐ Exhibit D - Evidence of Performance by Client
☐ Exhibit E - [________________________________]

cc: [________________________________] (Client)

Sources and References

• AS 09.10.053 - Contract actions limitation (three years)
• AS 09.10.120 - Municipal contract actions (six years)
• AS 09.30.070 - Prejudgment interest (rate set by Commissioner of Revenue)
• AS 45.02.725 - UCC sale of goods limitation (four years)
• AS 09.38.030 - Wage garnishment exemptions
• Alaska R. Civ. P. 82 - Attorney fees to prevailing party
• Alaska R. Civ. P. 79 - Costs
• Integrated Resources, Inc. v. Justice Resources, 789 P.2d 365 (Alaska 1990) - Elements of breach
• Guin v. Ha, 591 P.2d 1281 (Alaska 1979) - Implied covenant of good faith
• Vachon v. Tomich, 291 P.3d 341 (Alaska 2012) - Material breach