Demand for Damages before a Lawsuit: Legal Purpose and Strategy

In civil law, a demand for damages is an official notice of a legal claim. It notifies the recipient (the tortfeasor or breaching party) that you have suffered a loss and that you hold them legally responsible. Unlike a casual email asking for a refund, this document is a formal step in pre-litigation meant to create a record of the dispute.

• Informal Requests: 

Often lack specific legal theories or citations. They are easily ignored and carry little weight in court.

• Formal Demands: 

Drafted with procedural accuracy, citing specific statutes or case law. They include a hard deadline for a response and explicitly mention the intent to file a lawsuit if the compensation sought is not paid.

Many business contracts include a Notice of Claim provision. These clauses require you to send a demand for damages within a specific window (e.g., 30 days after a breach) before you are allowed to sue. Failing to follow these specific rails can lead to your lawsuit being dismissed on a technicality.

Sending a demand is advisable when you want to:

• Test the Defense: See how the opposing party justifies their actions.
• Preserve Evidence: Formally notify them to preserve relevant records.
• Demonstrate a Good-faith Effort: Show the court later that you tried to resolve the matter reasonably.

You must clearly describe the wrongdoing. Whether it is a breach of contract damages claim or a personal injury matter, you must link the facts to a specific legal violation. A demand that says you owe me because I am mad will be ignored; a demand that says you owe me because you violated Section 402 of the Commercial Code carries weight.

The damages calculation must be clinical and supported by evidence. Vague demands for a lot of money are ineffective. You must break down the total into specific categories:

• Economic Damages: Medical bills, repair costs, or lost profits.
• Non-economic Damages: Pain and suffering or loss of use.
• Statutory Damages: Amounts specified by law for certain violations.

If your case goes to trial, the judge will ask if you tried to settle. A formal demand for damages proves that you made a good-faith effort. In some jurisdictions, this is a prerequisite for recovering attorney fees.

A demand letter often triggers the opposing party’s insurance coverage. Once an insurance adjuster or corporate counsel sees a professionally drafted settlement demand, they perform their own risk audit. If the cost of defending the suit exceeds the compensation sought, they are more likely to settle.

Before the first word is written, we perform a forensic audit of the evidence. Do you have the contracts, the photos, and the receipts to back up your damages calculation? If your demand is built on speculation, it will backfire.

The tone should be professional and clinical. While you want to be firm, an overly aggressive or insulting tone can entrench the opposing party and make them less likely to settle. The timing must also be strategic: send it too early, and you might not know the full extent of your damages; wait too long, and you may hit the statute of limitations.

If you demand $1,000,000 for a $10,000 loss, you lose all credibility. The opposing party will realize you haven't performed a serious audit of your claim and will be more likely to ignore you or offer nothing.

In some cases, sending a demand can prompt the other party to file a preemptive lawsuit for a Declaratory Judgment. This allows them to choose the court and the timing, potentially giving them a strategic home-field advantage.

The recipient may:

• Accept: Pay the full amount (rare).
• Counter-offer: Offer a lower amount to resolve the legal claim quickly.
• Request More Information: Ask for specific records to verify your damages calculation.

If the deadline passes with no response or an unsatisfactory offer, the demand for damages has served its purpose as a notice. The next logical step is the filing of a formal complaint in civil court.