If you believe that someone owes you money for work that you did, a lawyer might tell you that the first step to recovering the money is to write a Letter of Demand. This is a formal request, usually written by a lawyer, that demands something from the other party. It is not always a debt. The Letter of Demand might ask the other party to refrain from doing something (injunction), or to carry out the obligations of a contract to which the other party has agreed.

For example, your artwork might feature in a friend’s documentary, but the friend failed to provide proper attribution in the final product. In this situation, you might want a lawyer to send the other party a Letter of Demand that asks for proper attribution to be included in the credits of the documentary.

Normally, a Letter of Demand will threaten further legal action (such as litigating the matter in a court) if the debt/injunction/request is not addressed within a certain period of time. This period usually varies anywhere from 14 days to 28 days but may also depend on the subject matter of the Letter and urgency of the matter.

A Letter of Demand is very effective, since it puts the other party on notice, essentially placing the ball in their court. Ignoring a Letter of Demand may be looked upon unfavourably if the matter ever gets to court. As such, the recipient is put under some pressure to respond within the set time period. The main utility of Letters of Demand is that they pressure debtors to service these debts while avoiding the expenses of litigation.

What Are The Benefits Of Sending A Letter Of Demand?

There are various benefits to writing a Letter of Demand, including:

  • Notifying the other party that you intend to take legal action if the demands of the letter are ignored;
  • Giving the recipient one final opportunity to attend to the demands;
  • Protecting the reputation of the recipient business/individual prior to commencing the litigation process;
  • Demonstrating to a court that you provided a fair and reasonable opportunity to address the demands; and
  • It will be considered evidence of a bona fide attempt to settle the matter outside the Courts.

What Is Involved In Sending A Letter Of Demand?

The first step is to make sure the details of the recipient are correct, such as their address, amount owing, terms of the contract etc.

Next, you will want your business lawyer to attach any relevant documentation, correspondence or other evidence that proves you are owed what you say you are owed. This is crucial, as it evidences your claim in the Letter of Demand.

In terms of style, the Letter of Demand should not look like a court document, nor should it insinuate that proceedings have already commenced. The idea is to give the other party an opportunity to address the demands without having to litigate the matter. In other words, it is an invitation to meet the demands or at least to negotiate the matter outside of court.

Finally, the Letter of Demand should be sent using registered post so that you can prove it was in fact sent. As previously mentioned, the period of time that you allow for the other party to respond might depend on the urgency of the matter, however, it will usually be no less than 14 days.

What Steps Should I Take If I Am Sent A Letter Of Demand?

The number one rule is not to ignore the letter. Read through to check that the details are accurate. If the amount is incorrect or the demands are unfounded, respond accordingly and request an explanation from the other party. The other party may have accidently omitted certain clarifying details.

If you disagree completely, seek legal advice from a business lawyer.

What Should I Do If I Agree With The Letter Of Demand?

If you believe the claim is accurate and you wish to meet the demands, get in touch with the other party and notify them of your intentions.

If you owe money and wish to discuss a payment schedule, communicate to the other party that all correspondence is to take place on a ‘without prejudice’ basis. This means that you can change your position in the future if you cannot agree and decide not to pay the alleged debt.

If the amount owed is more than you can afford, make an offer to meet the debt by paying it off in instalments. If you cannot pay the creditor at all, seek legal advice immediately.

Conclusion

If you need a Letter of Demand drafted because you are owed money or someone has not carried out certain contractual obligations, seek legal advice from a business lawyer, as you may be entitled to recover this money or enforce these obligations. LegalVision is experienced in this area and can provide you with a fixed-fee quote so that you have certainty moving forward.

Lachlan McKnight

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