Demand Letter for Contract Performance (California)

CALIFORNIA DEMAND LETTER FOR CONTRACT PERFORMANCE

California Drafting Notes

1. Adequate Assurance. For contracts for the sale of goods, Cal. Com. Code § 2609 permits a party with reasonable grounds for insecurity to demand adequate assurance of due performance in writing, and to suspend performance until such assurance is received. Failure to provide adequate assurance within 30 days is a repudiation.

2. Specific Performance of Real Property. Under Cal. Civ. Code § 3387, breach of an agreement to transfer real property is presumed to cause damages not adequately compensable by money — so specific performance is the default remedy for land contracts. This presumption is conclusive for owner-occupied single-family residences.

3. Anticipatory Repudiation. California recognizes the doctrine codified at Cal. Com. Code § 2610 (UCC goods) and at common law. The non-repudiating party may (a) await performance for a commercially reasonable time, or (b) treat the repudiation as final and sue immediately.

4. Damages Rule. Cal. Civ. Code § 3300 codifies the Hadley v. Baxendale rule: damages are the amount that will compensate the party aggrieved "for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom."

5. Limits on Specific Performance. Cal. Civ. Code § 3390 bars specific performance of (a) personal service contracts, (b) contracts unfair to the defendant, and (c) contracts whose terms are not sufficiently certain.

[LAW FIRM LETTERHEAD]

VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED AND EMAIL

Date: [__/__/____]

[NON-PERFORMING PARTY NAME]
[ADDRESS]

Re: Formal Demand for Contract Performance; Notice of Breach; Pre-Litigation Notice Under California Law — [CONTRACT NAME AND DATE]

Dear [NAME]:

This firm represents [CLIENT NAME] ("Client") in connection with the [CONTRACT NAME] dated [__/__/____], between Client and you (the "Contract"). This letter is a formal notice of default and demand for performance, served in good-faith anticipation of civil litigation to be filed in the Superior Court of California, County of [____________________], if you do not cure.

1. Recitals

1.1 Client and you entered into the Contract on [__/__/____]. A true and correct copy of the Contract is attached as Exhibit A.

1.2 Client has performed, tendered performance, or stood ready, willing, and able to perform all conditions precedent and all material obligations imposed upon Client by the Contract. Pursuant to Cal. Civ. Code § 1439, Client's performance has become due because all conditions precedent have been satisfied or excused.

1.3 You are in material breach of the Contract as described in Section 2 below.

2. Breaches / Non-Performance

Client hereby notifies you of the following material breaches of the Contract:

2.1 On or about [__/__/____], you failed to [DESCRIBE OBLIGATION — e.g., deliver goods conforming to Specification 4.2, complete the Work by the Completion Date, transfer title to the Property, provide Services in conformity with the SOW, make the installment payment due __/__/____].

2.2 [ADD ADDITIONAL BREACHES]

2.3 The breach is material because [________________________________], and it goes to the root of the bargain, depriving Client of the benefit for which Client contracted. See Brown v. Grimes, 192 Cal. App. 4th 265 (2011) (materiality standard in California).

2.4 Time of performance is of the essence. Cal. Civ. Code § 1657 fixes a reasonable time for performance where the contract is silent, and the parties have expressly / impliedly made time of the essence by [________________________________].

3. Demand for Performance

Client hereby demands that you perform each of the following within [____] calendar days of your receipt of this letter, on or before [__/__/____] (the "Cure Deadline"):

3.1 [SPECIFIC ACT OF PERFORMANCE REQUIRED, E.G.: deliver the Goods described in Section ____ of the Contract to [LOCATION] by [__/__/____]];

3.2 [________________________________];

3.3 [________________________________]; and

3.4 Provide Client with written confirmation, signed under penalty of perjury pursuant to Cal. Code Civ. Proc. § 2015.5, attesting to full, timely, and continuing compliance with Paragraphs 3.1–3.3.

4. Demand for Adequate Assurance (Cal. Com. Code § 2609) — If Goods

☐ Check if Contract involves sale of goods. Client has reasonable grounds for insecurity regarding your ability or willingness to perform based on [STATE FACTS], and pursuant to Cal. Com. Code § 2609(1), Client hereby demands in writing adequate assurance of your due performance. Until Client receives such assurance, Client is entitled under § 2609(1) to suspend any performance for which it has not already received the agreed return. Your failure to provide adequate assurance within thirty (30) days of your receipt of this demand shall constitute a repudiation of the Contract under § 2609(4).

5. Reservation of Right to Treat as Anticipatory Repudiation

If you indicate — by words or conduct — that you will not perform by the Cure Deadline, Client reserves the right under Cal. Com. Code § 2610 and the common law of California to elect to treat your statement or conduct as a final repudiation, cease its own performance, and commence suit immediately. See Taylor v. Johnston, 15 Cal. 3d 130 (1975).

6. Remedies Upon Failure to Cure

If you fail to cure by the Cure Deadline, Client will pursue any or all of the following remedies in the Superior Court of California, County of [____________________]:

6.1 Specific Performance. If the Contract concerns the sale, transfer, or lease of real property, Client will seek specific performance under Cal. Civ. Code § 3384, relying on the statutory presumption in Cal. Civ. Code § 3387 that breach of an agreement to transfer real property causes inadequate damages at law, which presumption is conclusive for owner-occupied single-family dwellings.

6.2 Compensatory Damages. Client will seek all damages permitted under Cal. Civ. Code § 3300, including all losses proximately caused and those likely to result in the ordinary course of things. For obligations to pay money, Cal. Civ. Code § 3302 entitles Client to the amount due plus interest. For breach of an agreement to convey real property, Cal. Civ. Code § 3306 provides the statutory measure: price paid, expenses, consequential damages, interest, and (if the breach was in bad faith) the difference between contract and market value.

6.3 Consequential Damages. To the extent foreseeable at the time of contracting as the probable result of breach, pursuant to Hadley v. Baxendale as codified at Cal. Civ. Code § 3300 and § 3301.

6.4 Prejudgment Interest. At the rate of ten percent (10%) per annum under Cal. Civ. Code § 3289(b), calculated from the date on which damages became certain or capable of being made certain by calculation under § 3287.

6.5 Injunctive Relief. Under Cal. Code Civ. Proc. § 526 and § 527, Client may seek a temporary restraining order and preliminary injunction to prevent further harm.

6.6 Attorney Fees. To the extent the Contract contains a fee-shifting clause, Cal. Civ. Code § 1717 shall render the clause mutual. Where statutory fee-shifting is available (e.g., Cal. Code Civ. Proc. § 1021.5 for enforcement of public rights), Client will seek such fees.

6.7 Costs of Suit. Under Cal. Code Civ. Proc. § 1033.5.

6.8 § 998 Offer. Client may serve a statutory offer of compromise under Cal. Code Civ. Proc. § 998, which, if rejected, may shift expert witness and post-offer cost awards against you.

6.9 Punitive Damages (if applicable). Where breach is accompanied by tortious conduct (fraud, conversion, bad-faith insurance denial, etc.), Cal. Civ. Code § 3294 permits exemplary damages upon clear and convincing evidence of malice, oppression, or fraud. See Freeman & Mills, Inc. v. Belcher Oil Co., 11 Cal. 4th 85 (1995) (tort of bad-faith denial of contract abolished; fraud remains).

7. Statute of Limitations

The applicable limitations period is four (4) years for actions on a written contract under Cal. Code Civ. Proc. § 337, two (2) years for oral contracts under § 339, and four (4) years for contracts for the sale of goods under Cal. Com. Code § 2725. The limitations period will not be waived by this letter.

8. Preservation of Evidence / Litigation Hold

This letter serves as a formal litigation hold notice. You are required to preserve all documents, electronically stored information, communications, metadata, and tangible items relating to the Contract and the performance or non-performance thereof. Failure to preserve may subject you to spoliation sanctions and evidentiary presumptions under Cal. Evid. Code § 413 and Cedars-Sinai Medical Center v. Superior Court, 18 Cal. 4th 1 (1998).

9. Settlement Communication Notice

This letter and any subsequent communications between counsel are settlement communications subject to Cal. Evid. Code § 1152 (offers of compromise inadmissible to prove liability). If mediation is initiated, communications will also be protected under Cal. Evid. Code §§ 1115–1128 (mediation confidentiality) as interpreted in Cassel v. Superior Court, 51 Cal. 4th 113 (2011).

10. Reservation of Rights

Nothing in this letter is intended as a waiver, release, or election of any remedy, all of which are expressly reserved. This letter does not constitute a novation, modification, or waiver of any term of the Contract.

Govern yourself accordingly.

Very truly yours,

[ATTORNEY NAME], Esq.
CA Bar No. [____________________]
[LAW FIRM NAME]

Encl.: Exhibit A — Contract
cc: [CLIENT CONTACT]

Sources and References

• Cal. Civ. Code §§ 1439, 1511, 1657, 1717, 3287, 3289, 3294, 3300, 3301, 3302, 3306, 3384, 3387, 3390
• Cal. Com. Code §§ 2609, 2610, 2725
• Cal. Code Civ. Proc. §§ 337, 339, 526, 527, 998, 1021.5, 1033.5, 2015.5
• Cal. Evid. Code §§ 413, 1115–1128, 1152
• Taylor v. Johnston, 15 Cal. 3d 130 (1975)
• Freeman & Mills, Inc. v. Belcher Oil Co., 11 Cal. 4th 85 (1995)
• Brown v. Grimes, 192 Cal. App. 4th 265 (2011)
• Cassel v. Superior Court, 51 Cal. 4th 113 (2011)
• Cedars-Sinai Medical Center v. Superior Court, 18 Cal. 4th 1 (1998)