Breach of Contract Demand Letter - Colorado

DEMAND LETTER - BREACH OF CONTRACT

State of Colorado

[________________________________]
Attorneys at Law
[________________________________]
[________________________________], Colorado [____]
Telephone: [________________________________]
Facsimile: [________________________________]
Email: [________________________________]
Colorado Attorney Registration 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.

PLEASE TAKE NOTICE: Under Colorado law, this letter constitutes a formal demand. Failure to respond within the time period set forth herein will result in the filing of a civil action in the appropriate Colorado District Court, at which time our Client will seek all available remedies including compensatory damages, consequential damages, prejudgment interest at 8% per annum compounded annually under C.R.S. § 5-12-102, attorney fees (if recoverable under the Contract or applicable statute), and costs of litigation.

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 COLORADO LAW - BREACH OF CONTRACT

A. Elements of Breach of Contract

Under Colorado law, the elements of a breach of contract claim are well established: (1) the existence of a contract; (2) performance by the plaintiff or justification for non-performance; (3) failure to perform the contract by the defendant; and (4) resulting damages. Western Distributing Co. v. Diodosio, 841 P.2d 1053, 1058 (Colo. 1992); Friedman v. Colorado Nat'l Bank of Denver, 843 P.2d 1377 (Colo. App. 1993).

Our Client satisfies each of these elements. The Contract is a valid and enforceable agreement. Our Client has substantially performed all obligations. You have failed to perform as required. Our Client has suffered quantifiable damages as set forth below.

B. Material Breach

Your breaches are material, not merely technical or trivial. Under Colorado law, a material breach excuses the non-breaching party's further performance and entitles the non-breaching party to recover all damages flowing from the breach. See Interbank Invs., LLC v. Eagle River Water & Sanitation Dist., 77 P.3d 814 (Colo. App. 2003). The factors for determining materiality include: (a) the extent to which the injured party will be deprived of the benefit reasonably expected; (b) the extent to which the injured party can be adequately compensated; (c) the extent to which the breaching party will suffer forfeiture; (d) the likelihood that the breaching party will cure; and (e) the extent to which the breaching party's behavior comports with standards of good faith and fair dealing.

C. Implied Covenant of Good Faith and Fair Dealing

Every contract in Colorado includes an implied covenant of good faith and fair dealing. Amoco Oil Co. v. Ervin, 908 P.2d 493 (Colo. 1995). Your conduct in breaching the Contract also constitutes a violation of this implied covenant, giving rise to additional remedies.

D. Specific Performance (if applicable)

☐ Check if applicable: Where monetary damages are inadequate to compensate our Client, Colorado courts may award specific performance of the Contract. See Centennial Ins. Co. v. Zylstra, 587 P.2d 789 (Colo. App. 1978). Our Client reserves the right to seek specific performance in addition to or in lieu of monetary damages.

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

☐ Check if applicable: If this Contract involves the sale of goods, the Colorado Uniform Commercial Code (C.R.S. Title 4, Article 2) applies. Under C.R.S. § 4-2-725, an action for breach of any contract for sale must be commenced within the time period prescribed in C.R.S. § 13-80-101. Additional remedies available under the UCC include:

• Cover damages under C.R.S. § 4-2-712 (buyer's right to cover)
• Market price damages under C.R.S. § 4-2-713
• Incidental and consequential damages under C.R.S. § 4-2-715
• Specific performance under C.R.S. § 4-2-716 (for unique goods)
• Buyer's right to reject nonconforming goods under C.R.S. § 4-2-601
• Revocation of acceptance under C.R.S. § 4-2-608

IV. DAMAGES

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

A. Direct/Compensatory Damages

B. Consequential Damages

Under Colorado law, consequential damages are recoverable where they were within the contemplation of the parties at the time of contracting or were a foreseeable result of the breach. Trimble v. City & County of Denver, 697 P.2d 716 (Colo. 1985).

C. Incidental Damages

D. Prejudgment Interest

Under C.R.S. § 5-12-102, when money or property has been wrongfully withheld, interest accrues at the rate of eight percent (8%) per annum compounded annually from the date of wrongful withholding. Alternatively, the claimant may elect to recover an amount that fully recognizes the gain or benefit realized by the person withholding such money or property.

E. Attorney Fees and Costs

☐ Contractual provision for attorney fees: The Contract provides for recovery of attorney fees by the prevailing party. See Contract, Section [____].
☐ Statutory basis for attorney fees: [________________________________]
☐ C.R.S. § 13-17-202 (Offer of settlement): If this matter proceeds to litigation and you fail to accept a reasonable settlement offer, our Client may be entitled to recover attorney fees and costs incurred after the date of the rejected offer.

F. Total Demand Summary

V. STATUTE OF LIMITATIONS

Under Colorado law, the following statutes of limitation apply to breach of contract claims:

☐ General contract actions (C.R.S. § 13-80-101): Three (3) years from the date the breach is discovered or should have been discovered through reasonable diligence.
☐ Liquidated debt / actions of debt (C.R.S. § 13-80-103.5): Six (6) years for actions for a liquidated debt or an unliquidated determinable amount of money due.
☐ Sale of goods (C.R.S. § 4-2-725): Actions for breach of contract for sale governed by C.R.S. § 13-80-101.

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 Colorado law, the duty to mitigate does not require extraordinary efforts or unreasonable expense. See Western Food Plan, Inc. v. Pecos Foods, Inc., 580 P.2d 823 (Colo. App. 1978).

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:

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

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 appropriate Colorado District Court (or the United States District Court for the District of Colorado, if diversity jurisdiction exists) seeking a judgment for all compensatory, consequential, and incidental damages;
2. Seek prejudgment interest at 8% per annum compounded annually under C.R.S. § 5-12-102;
3. Recover attorney fees and costs to the fullest extent permitted by the Contract and applicable law;
4. Pursue all post-judgment remedies available under Colorado law, including but not limited to garnishment of wages (C.R.S. § 13-54-104), levy on bank accounts, and liens on real and personal property;
5. Seek punitive damages if the evidence supports a claim under C.R.S. § 13-21-102 (where your breach rises to the level of willful and wanton conduct); and
6. Pursue any and all other remedies available at law or in equity, including but not limited to 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, including adverse inference instructions and monetary penalties. See Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003) (widely adopted in Colorado courts).

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: _______________________________
[________________________________]
Colorado Attorney Registration 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

• C.R.S. § 13-80-101 - General limitation of actions (three years)
• C.R.S. § 13-80-103.5 - Limitation of actions (six years for liquidated debt)
• C.R.S. § 5-12-102 - Statutory interest (8% per annum compounded annually)
• C.R.S. § 4-2-725 - UCC statute of limitations for contracts for sale
• C.R.S. § 13-21-102 - Exemplary (punitive) damages
• C.R.S. § 13-17-202 - Offer of settlement / cost-shifting
• C.R.S. § 13-54-104 - Wage garnishment provisions
• Western Distributing Co. v. Diodosio, 841 P.2d 1053 (Colo. 1992) - Elements of breach of contract
• Amoco Oil Co. v. Ervin, 908 P.2d 493 (Colo. 1995) - Implied covenant of good faith
• Trimble v. City & County of Denver, 697 P.2d 716 (Colo. 1985) - Consequential damages