The formal notice is often the first step in a dispute. But how useful is it? Why is it so important? This article explains what you need to know about the formal notice.

Distinction to be made

A formal notice is a written notice sent by the creditor to the debtor, reminding him to perform his obligations. The creditor can also denounce to his debtor a partial or incomplete execution, and thus demand a full and complete execution as it is due. In short, the formal notice is a “final notice” given by the creditor to his debtor.

It is important at the outset to distinguish the fact for the creditor to “put his debtor in default” and the fact of being “in default”. While the former refers to a letter sent by the creditor, the latter constitutes a state of the party whose failure to perform his obligation is legally established. This state of default appears only when the delay given to the debtor to perform has expired and that the debtor failed to do so.

For example, if the debtor is summoned in the formal notice to comply with his obligations within 10 days of receiving the letter, he is considered being in default as of the 11th day. The real effects of the notice of claim only begin at that moment. This is why, among other things, it is important that your demand letter contain a deadline.

When to send a formal notice

According to the law, there are certain situations where the creditor is exempt from writing a formal notice. This is the case when the debtor clearly indicates that he will not perform his obligation, or when he was supposed to perform within a certain period and did not do so. For example, if the photographer hired for your wedding did not show up on the date agreed upon, there is no need to remind him after that his presence was required!

This is also true in cases of emergency, where an immediate intervention is necessary. But be careful, “emergency” cases are interpreted strictly, and the rule is that the formal notice must be sent. It is also possible to provide in the terms of a contract that a party will be in default automatically in a given situation.

In any event, it must be kept in mind that these situations are the exception and not the rule. A creditor who thinks he qualifies in one of them will have to justify his position. The courts have repeatedly reminded us that failure to send a notice of default is fatal and prevents the creditor from seeking recourse. Therefore, we recommend that you send a formal notice in all cases, even when you may be exempted. It is better to do more than not enough!

In addition, you should send your debtor a formal notice as soon as you notice that your debtor is in default. This will avoid any ambiguous situation where the creditor’s silence could be interpreted as an additional grace period granted to the debtor.

Why sending a formal notice

The purpose of a formal notice is to give the debtor a concrete opportunity to perform. It is therefore important to choose a realistic and sufficient deadline in your demand letter, adapted to the situation.

Moreover, in the event that a legal action is taken without the debtor having first been put in default, the debtor is given a sufficient time for performance and, if he does so, the legal costs are to be paid by the creditor.

For this reason, while some situations exempt you from sending a formal notice, others require you to do so, or else to have your recourse rejected. It is common to see this situation with respect to the performance of the work: before giving a mandate to another contractor to correct poorly executed work, you must give the original contractor a chance to repair the situation himself. The same logic applies to a buyer who notices a defect in the property purchased: the buyer must notify the creditor, the seller, of the existence of the defect and give the seller formal notice to remedy it himself. 

Beyond the right for the debtor to perform, the formal notice is to the advantage of the creditor since there is a non-negligible chance that the debtor will perform. If this is not the case, the letter of default represents the inevitable gateway to any legal claim. Indeed, the law provides that the creditor may avail himself of sanctions in order to force the execution of his debtor only when the latter is considered to be in default. Thus, the formal notice, accompanied by a realistic deadline for the debtor’s performance, represents an opening condition to ultimately assert your rights before the court.

Another usefulness of the formal notice is that it marks the starting point for the interest you may claim from your debtor during legal proceedings, in addition to the amount of your debt. It is therefore to your advantage to send a formal notice as soon as possible, as of your debtor defaults.

To remember

The formal notice is an indispensable tool. This letter could save you a lot of trouble by settling your situation once and for all, and if not, it will allow you to move on to the next step. Consult us, we will be pleased to draft this demand letter for you and advise you.