A Canadian Demand Letter for Breach of Contract is a formal written notice sent by an aggrieved party to the party who has failed to fulfil their contractual obligations. This document serves as a pre-litigation communication that clearly identifies the breached contract, describes the specific violation, quantifies the damages suffered, and demands that the breaching party either cure the breach or pay the claimed amount within a specified deadline. Under Canadian law, contracts are governed primarily by provincial common law in most provinces and by the Civil Code of Quebec (CCQ) in Quebec.

The demand letter plays a critical role in the Canadian legal system because it demonstrates good faith and a genuine attempt to resolve the dispute without resorting to litigation. Canadian courts routinely consider whether the plaintiff made reasonable efforts to settle the matter before commencing proceedings. In Ontario, the Rules of Civil Procedure require parties to consider alternative dispute resolution before trial, and a well-crafted demand letter forms the foundation of that record. Similarly, in British Columbia, the Notice to Mediate Regulation (B.C. Reg. 127/98) encourages early resolution.

From a practical standpoint, a breach of contract demand letter establishes the timeline of the dispute, preserves evidence of the claim, and triggers important legal consequences. Under Ontario's Limitations Act, 2002 (S.O. 2002, c. 24, Sched. B), the two-year basic limitation period begins when the claim is discovered or ought to have been discovered. The demand letter creates a clear documentary record of when the creditor asserted the claim. In Quebec, the Civil Code prescribes a three-year prescription period for most personal actions under CCQ art. 2925, and a mise en demeure under CCQ art. 1594 is considered a standard prerequisite before legal proceedings. Alberta's Limitations Act (RSA 2000, c. L-12) similarly imposes a two-year limitation period from the date of discovery. The letter also establishes the date from which pre-judgment interest may begin to accrue under provincial legislation such as Ontario's Courts of Justice Act (R.S.O. 1990, c. C.43, s. 128) or British Columbia's Court Order Interest Act (RSBC 1996, c. 79).

A Canadian Demand Letter for Breach of Contract is needed whenever one party to an agreement fails to perform their obligations and informal attempts to resolve the matter have proven unsuccessful. The most common scenario involves non-payment for services rendered. For example, a contractor who completed renovation work on a residential property in Toronto but has not received the agreed-upon payment would send a demand letter referencing the construction contract, specifying the outstanding amount in Canadian dollars, and setting a clear deadline for payment.

Beyond non-payment, demand letters are essential for addressing failures of performance. If a software development firm in Vancouver contracted to deliver a custom application by a specific date but failed to meet the deadline, causing the client to incur additional costs by hiring a replacement developer, the client would send a demand letter detailing the breach, quantifying the consequential damages, and demanding either completion of the work or monetary compensation. The letter should reference the specific contractual provisions that were violated and include supporting documentation such as the original agreement, correspondence, and evidence of the replacement costs.

Demand letters are also critical before filing claims in Small Claims Court. Provincial Small Claims Court limits vary significantly across Canada: Ontario allows claims up to CAD $35,000, Alberta up to $50,000, British Columbia up to $5,000 through the Civil Resolution Tribunal, Quebec up to $15,000, and Saskatchewan up to $30,000. Filing a claim without first sending a demand letter can work against the plaintiff, as courts may question whether reasonable settlement efforts were made. A well-drafted demand letter that gives the breaching party 10 to 30 business days to respond and cure the breach often resolves disputes without the expense, delay, and uncertainty of litigation. Many breach of contract disputes in Canada are settled at the demand letter stage, saving both parties thousands of dollars in legal fees and months of court proceedings.

An effective Canadian Demand Letter for Breach of Contract must identify both parties with their full legal names and current addresses. For individuals, use the name as it appears on government-issued identification. For corporations, use the full legal name as registered with the applicable provincial corporate registry (e.g., Ontario Business Registry, BC Registry Services, Alberta Corporate Registry). The letter should be sent by a method that provides proof of delivery, such as Canada Post registered mail with signature confirmation, courier service, or email with delivery and read receipts.

The letter must clearly identify the contract that was breached, including the agreement title, date of execution, and the names of the original parties. Reference the specific provisions that were violated and describe the breach in factual, specific terms. Avoid vague or emotional language; instead, provide dates, amounts, and references to contract clauses. The description should establish both that a valid contract existed and that the recipient failed to perform their obligations under it.

Quantify the damages in Canadian dollars with a clear breakdown of the principal amount claimed, any additional costs or expenses incurred as a result of the breach, and pre-judgment interest where applicable. Under Ontario's Courts of Justice Act, pre-judgment interest accrues at the prescribed quarterly rate from the date the cause of action arose. British Columbia's Court Order Interest Act and Alberta's Judgment Interest Act provide similar mechanisms. Set a reasonable deadline for compliance, typically 10 to 30 business days. State the specific consequences of non-compliance, including filing a claim in the applicable provincial court. Include the governing law clause specifying which province's laws apply to the contract and the dispute. The letter should be dated, signed, and reference applicable provincial statutes such as the relevant Limitations Act to establish the legal framework. Include an offer to negotiate, as Canadian courts view settlement efforts favourably when assessing costs.