First, take a breath
A claim is a problem to manage, not a verdict
Being accused of owing money or breaking a promise is unsettling, especially when the claim feels unfair. But most business disputes are resolved without a trial, and the owners who fare best are the ones who respond methodically.
The goal for the first 30 days is simple: protect your deadlines, protect your evidence, protect your insurance coverage, and avoid saying anything that makes the claim stronger. Strategy comes after those four basics are secure.
What follows is general information for New Jersey businesses. Court rules and contract terms vary, so treat it as a framework and get advice on your specific papers.
Demand letter or lawsuit: know which one you have
A demand letter is a written request from the other side or its attorney asking you to pay, perform, stop doing something, or otherwise resolve a claim. It is not a court filing, and there is no court deadline attached to it, although the letter will usually set its own response date and may warn that a lawsuit will follow.
A summons and complaint is different. It means a case has been filed, and the summons states how long you have to file a written answer or other response. Missing that deadline can lead to a default judgment, meaning the court may grant the other side what it asked for without hearing your side. If you have been served, treat it as urgent and speak to counsel the same week.
One point catches many owners off guard: in New Jersey, an LLC or corporation generally cannot appear in Superior Court through an owner who is not a lawyer. With limited exceptions, the business needs a licensed attorney to file its response.
Days 1 to 30
Six steps for the first month
Calendar every date
Write down the date you received the papers, how they were delivered, and every deadline they mention. Put the response date in more than one calendar and tell whoever handles your mail.
Preserve the evidence
Once a dispute is reasonably anticipated, you generally must preserve relevant records. Suspend auto-delete on email and messaging apps, keep texts and voicemails, and tell key employees in writing not to discard anything related to the matter. Do not edit or tidy up files.
Notify your insurer
General liability, professional liability, employment practices and other policies may cover the claim or its defense, but many require prompt notice. Send the papers to your broker or carrier right away and keep proof that you did.
Stop talking to the other side
Calls and emails explaining your position can be quoted back to you later. Route communication through counsel, or agree on a short, neutral holding reply before anything else goes out.
Rebuild the timeline
Gather the contract, purchase orders, invoices, change orders, emails and payment records, and write a dated chronology while memories are fresh. Note who at your company knows what.
Decide on a strategy
With the documents and deadlines in view, choose a path: dispute the claim, negotiate, propose mediation, or file a formal response and any counterclaims.
What to look for in the contract
The agreement behind the dispute often shapes the response more than the facts do. When you review it, look specifically for:
- A dispute resolution clause requiring negotiation, mediation or arbitration before or instead of a lawsuit
- Notice-and-cure provisions the other side may have skipped
- Caps on damages or exclusions of lost profits and consequential losses
- Governing-law and venue clauses that decide which state's law applies and where the case belongs
- Attorney's-fee provisions, which can change the economics of settlement for both sides
Timing also matters. Contract claims in New Jersey are generally subject to a six-year limitation period, and sale-of-goods claims under the UCC generally to four years, though accrual and contract terms can change the math. The firm's guide to the statute of limitations for business claims explains how the clock works.
Your options, from quiet resolution to a formal defense
Not every claim deserves a fight, and not every claim deserves payment. Depending on the facts, sensible paths include:
- A written response disputing the demand, with documents, that ends the matter
- A negotiated settlement or payment plan, documented with a proper release
- Mediation, which is private and often far quicker than court
- Arbitration, where the contract requires it
- A formal answer with defenses, and counterclaims if the other side breached first
The firm's comparison of mediation, arbitration and litigation sets out cost, speed and privacy differences. If the claim is really about whether a contract was performed, the page on breach of contract disputes covers the elements a claimant must prove.
Mistakes that make claims more expensive
The same errors appear again and again: ignoring the papers in the hope they go away; deleting messages 'to be safe', which can lead to sanctions; admitting fault in writing before the facts are understood; discussing the case widely with staff, customers or on social media; and waiting until the week of the deadline to get advice.
Keep the business running, limit who discusses the matter, and tell customers or vendors only what they need to know. Paul H. Appel reviews demand letters and complaints, handles negotiation and mediation, and helps owners decide when court representation is needed through the firm's business dispute resolution services.
Questions & answers
Lawsuit and demand letter questions
How long do I have to respond to a lawsuit in New Jersey?
The deadline depends on the court and the type of case, and it is stated in the summons. It is typically measured in weeks from the date of service, not months. Count from the day you were served, not the day you read the papers, and get advice well before the deadline so there is time to prepare a proper response.
Should I answer a demand letter myself?
It is usually better to have an attorney review it first. A well-meant reply can concede facts, waive defenses or confirm a debt. Sometimes the right answer is a short, firm letter from counsel; sometimes it is a negotiated resolution; occasionally it is silence until the facts are clearer.
Do I really have to notify my insurer about a demand letter?
Many policies require notice of a claim, and some define a demand letter as a claim. Late notice can jeopardize coverage. Notify your broker or carrier promptly, even if you think the claim is weak or not covered. Let the insurer decide coverage in writing.
Can I just pay the claim and move on?
Sometimes that is the sensible business decision. If you pay, get a written settlement that describes what is being resolved, includes a release of the claims, and states that payment is not an admission of liability. A payment without a release can leave the door open to further demands.
