Have you entered into a contract with another party? Is the other party in breach of the contract?  Have you lost money or suffered because of this? Have you unsuccessfully tried to negotiate with the party in breach?

If you answered ‘yes’ to these questions, a letter of demand can help.

A letter of demand is usually sent as a final reminder before taking legal action. It sets out your legal claim against the party in breach. It also includes your legal rights and a demand for compensation, refund or performance of an obligation. You can also include a time limit, within which the party in breach must comply with your request, or risk going to court to settle the issue.

While a letter of demand can be an informal document, to get your point across it should include a clear structure, all relevant details and a concise legal argument. This article outlines the structure of an effective letter of demand.

Introduction

Like any letter, you should address the relevant person (i.e. the party in breach). You should also immediately state what the letter is about. For example, “This letter refers to the installation of the washing machine on [date]”.

The Contract

Following the introduction of the letter, you should summarise the relevant terms of your contract. It is best to include as many specific details as possible such as

  • dates;
  • times;
  • names of the individuals involved; and
  • any relevant receipts or invoices (especially if you are seeking a refund or compensation for money).

To ensure the information is easy to understand, you may wish to present such information in a table.

You should also list all of the terms of the contract you complied with and any obligations you performed. You should make it clear that you upheld your end of the contract and relied on the other party to do the same.

Breach of Contract

Before detailing how the other party is in breach of the contract, you should outline any applicable law. You may rely upon general contract law, the Australian Consumer Law (ACL) or other specific legislation depending on your matter. After outlining the relevant law, you can list how the other party is in breach of their obligations according to the law and the contract. Being specific is important, so you should include as many relevant details as possible.

For example, you may have hired a plumber to install a washing machine in your new house. The plumber did the job and took their payment. However, after a few days, the washing machine begins to leak. After calling the plumber to fix the problem, they refused. You can send them a letter of demand and refer to the plumber’s obligations under the ACL. A service provider under the ACL guarantees to provide a service with acceptable care and skill or technical knowledge. They also guarantee that the service is fit for the purpose. You should state in your letter that the leaking washing machine is a breach of the plumber’s obligations under the ACL.

If you attempted to negotiate rectifying the breach with the other party, you should include that in this section. It is important for the other party and the court (if matters escalate) to recognise that you have taken reasonable steps to resolve the breach.

Effect of the Breach

Your letter of demand should include all of the ways the breach of contract has affected you. You may have:

  • lost money in paying for services that were not adequately provided to you;
  • lost income in being unable to work because of this breach e.g. a mechanic damaged your car engine making you unable to use your car for professional delivery services; or
  • lost money in hiring someone else to fix the breach of the other party.

Ultimately, the ways in which the breach affects you, depends on your specific circumstances.

Demand for Remedies: Compensation, Refund or Performance of Obligation

You should clearly list how exactly you want the other party to rectify their breach and make up for the damage you suffered. You should check the relevant law because it will typically state the remedies available to you.

If you are seeking a refund or monetary compensation, you must provide evidence of any payments of money or money owed.  For example, if you are seeking a refund of money you paid to the plumber, you must be able to provide a receipt as evidence. On the other hand, if you are seeking compensation for services, you should provide an invoice as evidence that another party owes you money.

Going to Court

To ensure the party in breach receives your letter of demand, it is best to send the letter via email and post. Sometimes people do not check their emails or do not receive mail and so it is useful to cover all of your options.

However, whether the other party reads your letter and takes it seriously is out of your control. It is useful to include your intention of taking the matter to court if the other party fails to comply with your demands within a time frame. Doing so means you do not have to wait for a response from the other party to take further action.

Key Takeaways

Before sending a letter of demand, it is important to attempt to negotiate with the party in breach. If your negotiations are unsuccessful, you can send a letter of demand. It is important that the structure of your letter is effective and clearly includes:

  • a summary of your contract with the other party;
  • details of the breach of contract;
  • damages you suffered;
  • a demand for remedies; and
  • your intention to take the matter to court if the other party does not comply.

If you have any questions or need assistance in drafting and sending a letter of demand, get in touch with LegalVision’s debt recovery lawyers on 1300 544 755 or fill out the form on this page.

Lachlan McKnight
If you would like further information on any of the topics mentioned in this article, please get in touch using the form on this page.
Would you like to get in touch with Lachlan about this topic, or ask us any other question? Please fill out the form below to send Lachlan a message!