A cease and desist letter is a preliminary step taken to inform the other part to stop an activity. We set out the purposes of a cease and desist letter, when parties can use them, and how you can respond if you receive one from another party.
What is the Purpose of a Cease and Desist Letter in Disputes?
Typically, the first step a party takes when they want to collect money owing from another party is to send a letter of demand. The letter may warn of further legal action if the party doesn’t respond to the stated demands.
Similarly, a cease and desist letter is the first step when a party has infringed or breached another’s rights. The letter should state the following:
- notify the other party they are participating in an activity that they shouldn’t be (for example, breaching a contract or infringing your intellectual property rights);
- demand that the other party ‘cease and desist’ their conduct;
- provide a warning to the other party that if they do not stop their activity, there is a possibility of further legal action.
When Do Parties Use Cease and Desist Letters?
Parties often send cease and desist letters where:
- there has been a breach of a contract (e.g. if your employee has left your company and then breached their restraint of trade clause);
- there has been a trademark infringement;
- there is copyright infringement;
- a person is engaging in defamatory behaviour (e.g. someone is posting comments to your social media accounts that are defamatory); or
- a person is engaging in behaviour that is intimidating or harassing.
As cease and desist letters are seen as the step before legal proceedings, parties may refer to them in any subsequent court action. For example, the statement of claim may make reference to the cease and desist letter. You should also keep in mind that parties can use this letter in any costs applications in subsequent legal proceedings which may arise.
What If I Receive a Cease and Desist Letter?
If another party sends you a cease and desist letter, it is advised you seek legal advice. Failure to respond or address the conduct raised in the letter may mean that the party takes (costly and time-consuming) court action against you. Even if you don’t believe you have partaken in the alleged activity, it is wise to respond and try to reach a negotiated outcome.
Key Takeaways
A cease and desist letter can be a powerful tool and is a necessary first step if a party is breaching a contract or engaging in other infringing behaviour. As this correspondence is often a precursor to potential court action, a lawyer should draft the letter. If you have any questions or need assistance with drafting, get in touch with our specialist disputes team on 1300 544 755 for fill out the form.