If you receive a formal notice, it means that someone is claiming something from you and is requesting you to comply with the obligations it believes that you should respect. This means that this person intends to take a legal action against you if you do not fulfill your obligations towards him or her.
However, to receive a formal notice does not mean that you will automatically be sued. Indeed, following its receipt, you can try to reach an agreement with the person who claims something from you or negotiate a settlement that the latter deems satisfactory. In addition, you can jointly and commonly decide to use mediation or alternate dispute resolution mechanisms to avoid a lawsuit.
Finally, the author of the formal notice could decide to abandon the idea of suing you without your dispute being settled.
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