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Four Key Points to Know About Cease and Desist Letters in Commercial Disputes

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You are probably aware of the various methods to resolve a commercial dispute. Understanding these methods can prove beneficial if your business finds itself in disagreement with another. However, commercial disputes encompass a wide range of issues. For instance, they may involve breaches of contracts or disputes over intellectual property ownership, such as trademark usage. Additionally, they could be concerned about potential defamation. Within these commercial disputes, you might encounter a cease and desist letter as a means of resolution. This article aims to outline four essential aspects of cease and desist letters in commercial disputes.

What Should You Know About Cease and Desist Letters?

If you receive a cease and desist letter regarding a commercial dispute, it helps to know some key points about these. Here are four key points to know.

1. What is a Cease and Desist Letter?

The first key point to understand about a cease and desist letter is that if your business receives one, you should immediately seek legal advice from a commercial solicitor. These are serious letters that can lead to legal proceedings against you. The letter demands that your business stop the alleged illegal activity and specifies the date by which you need to cease it. Failure to comply can result in legal action.

There are various reasons why a business may receive a cease and desist letter. These may include situations such as:

  • breach of contract;
  • unauthorised disclosure of confidential information;
  • accusations of trespassing;
  • infringements on intellectual property, such as copyright and trademarks; and
  • defamatory statements made in a commercial context, such as false information on a business website.

2. Does Your Business Legally Have to Respond?

You need to understand if your business must legally respond when you receive a cease and desist letter. There is no legal requirement for you to respond to such a letter. This is because it is a request rather than a:

  • court order;
  • summons; or
  • legally binding or enforceable.

However, a cease and desist order from a court is legally binding and enforceable.

Even though a cease and desist letter is not legally enforceable, the sender might pursue further legal action. Therefore, it is in your best interest to respond. By responding, you can negotiate with the sender or choose to comply with the request to stop the wrongdoing. This might be easier than dealing with the stress and costs of court action. Sending a cease and desist letter can be very effective for a business, as its removal can deter a person or company from continuing the wrongdoing.

3. Investigating a Cease and Desist Letter

When you receive a cease and desist letter, it is crucial to understand that you might need to investigate the allegation of wrongdoing within your business. This is because you may not know upon receiving the letter if the commercial dispute about the alleged wrongdoing is genuine. The need for investigation may vary depending on the size of your business. For instance, you might need to investigate with:

  • employees;
  • freelancers; or 
  • third-party contractors to your business.

This might be necessary if another business claims in a cease and desist letter that people working with your company are trespassing in their canteen and break-out areas during lunchtime. In this scenario, you will want to speak to your employees and others who work with your business to see if this is true.

4. What Further Legal Action May Occur?

Understanding the repercussions of a cease and desist letter in terms of legal action is crucial. If you do not comply with a cease and desist letter or simply ignore it, this could trigger additional measures. These may involve:

  • taking part in alternative dispute resolution (ADR) such as arbitration;
  • litigation in a commercial court hearing in the form of a claim for damages; or 
  • court proceedings resulting in a court injunction.

Key Takeaways

A cease and desist letter accuses you of wrongdoing and demands that you stop. It can relate to actions like trespassing and leaking confidential information. One important point is that you have no legal obligation to respond to a cease and desist letter, but it is in your business’ interest to do so. Additionally, when you respond to a cease and desist letter, you may need to investigate the alleged wrongdoing because you might not know if your business committed it. It is crucial to understand that a cease and desist letter can lead to legal action, such as commercial litigation, resulting in a claim for damages.

If you need help understanding cease and desist letters in commercial disputes, our experienced disputes and litigation solicitors can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. So call us today on 0808 196 8584 or visit our membership page.

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Clare Farmer

Clare Farmer

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