How to write a letter before action for breach of contract (UK): an eight-step guide

If another business has breached a contract with you, for example by not paying your invoices, the first formal step is a letter before action. This is not optional. The courts expect you to follow the pre-action protocol before you issue a claim, and the letter before action is the start of that process. Below is the eight-step process I use, which goes with a free evidence checklist and template letter. The example throughout is an unpaid invoice, because that is the breach most small businesses deal with, but the same process applies to other breaches of contract.

What is the pre-action protocol?

If there is a breach of contract in the UK, the courts will expect you to follow what is called the pre-action protocol. It is a procedure aimed at helping two disputing parties resolve an issue without having to go to court. The rationale is simple: if an issue can be resolved outside the courts, it should be.

The first step in the pre-action protocol is for the claimant, meaning you, to draft a letter before action and send it to the defendant. The letter tells the other side what they have done wrong, what you want them to do about it and how long they have to respond. Everything below is about doing that properly, so that if the matter does end up in court you can show you did things by the book.

Collect evidence of the breach of contract

• Step 1: collect your evidence. To write a letter before action that is strong, you must have strong evidence. The checklist I use (document A) is short and covers three kinds of evidence.

First, evidence that an agreement exists between you and the breaching party. Suppose they have breached the contract by not paying you on time. You need to show that they actually agreed to pay you within a specified period. Is that written in a contract that says the defendant has 30 days? Is it in an email? Or, worse, was it only agreed over the phone? The stronger the record of the agreement, the stronger the letter.

Second, evidence of the breach itself. Have you sent the defendant invoices and emails stating that the invoice is overdue? Have they responded acknowledging that they are past the payment period? An admission in writing from the other side that the invoice is overdue is very useful evidence.

Third, and ideally, evidence that you have tried to resolve the issue amicably. This might be emails chasing payment politely, offers to discuss the problem or a proposed payment plan. If the case goes to court, you want to be able to show the judge that you tried everything reasonably possible to resolve it without disturbing the courts.

• Step 2: save the evidence as a PDF bundle. Put everything in one place. This is simply easier for managing the case later, and it means that when you draft the letter, or hand the matter to a solicitor, the whole story is in one document.

How to draft a letter before action

• Step 3: write the letter. The template I use (document B) is a letter before action for breach of contract, amended to be as easy as possible to use. As always, you replace the square brackets with your own information: your logo, your company details and the defendant company's details.

The letter has two main parts. The first is a table of definitions. The second is the body of the letter. The body uses defined terms, which you can recognise because they are capitalised, and those terms are defined in the table. It is set up this way so that you only need to amend the table, filling in your details where the square brackets are, without having to touch the body of the letter unless it does not suit your situation. Once the table is complete, read the whole letter through once to check that every defined term now makes sense in context.

Sign and date the letter

• Step 4: sign and date it. The date on the letter should be the date you actually post it to the defendant. If you date it today, you must send it today. A mismatch between the date on the letter and the date it was sent gives the other side something to argue about.

How to send a letter before action

• Step 5: send it by Signed For first class post. Send it to the defendant's registered office address, unless your contract with the defendant says otherwise, for example by specifying a different address for notices. You can buy the postage on the Royal Mail website, and you can find the registered office address of a company on the Companies House register.

The reason for using Signed For post and the registered office is to eliminate the possibility of the defendant arguing that they never received any letter from you. Believe it or not, that is quite a common defence, and it is an easy one to shut down if you have sent the letter properly in the first place.

Keep the tracking code

• Step 6: store the tracking code. Keep the tracking code Royal Mail gives you somewhere safe for future reference, ideally in the same folder as your PDF evidence bundle. Again, this is so you can evidence that the defendant did receive the letter.

Set a reminder for the response deadline

• Step 7: set a reminder. In the letter you will have specified how many days the defendant has to answer. The template says they should respond within 14 days with the documents you have requested. You can amend this, but ideally not to less than 14 days, because you have to show that you have been reasonable. Whatever period you give is the one to use when setting your reminder, counted from the date you posted the letter.

What happens after a letter before action?

• Step 8: deal with the response. This is the most unpredictable step because it depends on the defendant. There are two main outcomes.

The first is that the defendant responds to your letter. In that case you should at least consider engaging in attempts to resolve the issue amicably, for example by negotiating a settlement. Remember that the whole point of the pre-action protocol is to avoid court if a sensible deal can be reached, and a court will expect you to have engaged with a genuine response. If a settlement is reached, record it in a settlement agreement so that both sides are bound by what was agreed and the dispute does not simply reopen later.

What if they ignore your letter before action?

The second outcome is that the defendant simply ignores your letter, which, strangely, is quite common. Usually it is because they do not take it seriously, they do not believe you will actually pursue anything, or they simply do not feel like replying. We see this quite often when companies draft and send their own letters, possibly because they do not have the budget for a solicitor to draft and send it.

This is one of the main benefits of engaging a solicitor, alongside knowing the letter has been drafted properly. A letter from a solicitor carries more weight and more gravitas than one the company sends itself. The defendant is more inclined to answer, and maybe even to comply with your requests, because they can see you are investing time and money to pursue the payment. In my experience the chances of success are a lot higher.

Next steps

Start by gathering the three kinds of evidence and putting them in one bundle, then complete the template letter, date it on the day you post it and send it Signed For to the registered office. Set your 14-day reminder. If the deadline passes with no reply, or the response is unsatisfactory, speak to a commercial solicitor about sending a formal letter and the options for taking the claim further.