What is a Letter of Demand

First things first, what is a letter of demand? A letter of demand is a formal request, usually sent as a final reminder to the other party before any other legal proceeding. A letter of demand can refrain another party from a certain action or to follow the obligations that they had agreed on.  In most common cases, a letter of demand is written to demand the late payment of debt. However, it is important to send at least 1 or 2 reminder letters or other forms of reminder prior to a letter of demand to ensure the debtor is aware about the debt and that there’s no misunderstanding as other alternatives are always more preferable in order to maintain business relationships. 

It is important to check following is included in the letter:

  • Recipient’s address
  • The amount owed
  • The terms of contract

Next you might also want to attach the relevant documents as evidence of the debt such as tax invoices, prior reminder letters, or contracts.

Why send a letter of demand

When there’s a delay in the debt payment process, it is possible that the debtor might have forgotten, or in some cases they are not aware that they owed you money. So in order to avoid all misunderstandings, it is crucial to send reminder letters prior to a letter of demand. 

Although it might not be necessary to send the letter of demand prior to taking further legal action, it is good evidence to prove to the court that you took the proper legal actions to protect yourself as well as providing your debtor a chance to defend against the claim. Usually the letter of demand works effectively, since it is the last chance for the debtor to take action. By convincing the debtor to complete the payment accordingly, the dispute is solved without having to waste your time and money.

 

When to send a letter of demand 

As mentioned above, it is possible that it is not the recipient’s intention to start the dispute. Therefore prior to sending a letter of demand consider resolving the dispute in friendly attempts to maintain the relationship between your business and to ensure there are no misunderstandings. The common informal reminders are via phone or email, which is enough to prompt the payment. 

Sending out a letter of demand with no prior notice to the recipient is unlikely to be appreciated. However, if after all these friendly reminders are done, it shows that the recipient has no intention to complete the payment, which is why we recommend that it is time to issue a letter of demand. 

 

How to send a letter of demand

A letter of demand in Australia usually includes the following information:

  • The amount of how much they owed you
  • The date payment is demanded by 
  • Relevant documents such as agreements or contracts, tax invoice, or prior reminder letters 
  • What will be your next step on legal proceedings, if there is no response from them or if the payment is not received.

 

It is also important to ensure that the language in your letter is formal, polite and professional. In addition, check if the address is correct, as well as the date and signature are written properly. 

The best way to send a letter of demand is via both email and postal mail to ensure the recipient receives your letter of demand. Because some do not receive mail while some people might not check their email, it is best to cover both options. Whether or not they are taking their action seriously, it is out of your control. That’s why it is important to include in the letter that your next step in legal action is taking this matter to the court if your demand has not been met within the specific date. By doing this, you no longer need to wait for their response to take further actions.

Although it is possible to write a letter of demand by yourself, using a professional service from a law firm to draft the letter for you is much less time consuming and also has a more powerful impact. A letter of demand drafted by a lawyer also comes with a header from a law firm, which increases the chance to succeed in negotiation. 

If you need assistance in drafting and sending a letter of demand, contact LegalVision’s debt recovery lawyers on 1300 544 755 or fill out the form on the page. Our LegalVision’s team has a broad range of experience in providing effective debt recovery solutions. Contact our experts for more information.