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Provided the deadline hasn’t passed. If it has, a late reply is still far better than none.
A letter of demand is a formal request to pay money or do something by a set date. It often comes from a lawyer and can sound alarming, but it is not a court order and it doesn’t mean you’ve lost.
This explainer covers what the letter is for, what to do in the first week, and how most of these situations end.
What a letter of demand is for
Before going to court, people are usually expected to try to resolve a dispute directly. A letter of demand is often that step. It sets out what the sender says you owe or must do, why, and what they intend to do if you don’t respond. Courts often look at whether both sides made a genuine attempt to settle, so the way you reply matters.
Letters of demand are used for unpaid invoices, loans between friends, damage to property, disputes over work done and many other disagreements. The same approach works for almost all of them.
What to do this week
Find the deadline and put it in your calendar.
Read the letter carefully and note exactly what is claimed.
Gather the contract, invoices, emails and messages it refers to.
Don’t admit anything or make an offer until you’ve had advice.
Book a short meeting, and bring the letter and your documents.
Read it twice
On the first read most people focus on the amount. On the second, look at the details. Who is the claim against: you personally, or your business? What is it based on: a contract, an invoice, a promise? Has interest or a fee for legal costs been added, and is there any basis for it? Is the amount right?
It is common to find an error, a payment that wasn’t credited, or a charge that was never agreed. Those details often become the basis of a settlement.
Don’t ignore the deadline
The deadline is the one part of the letter you can’t ignore. If it passes with no reply, the sender may start court proceedings, and a court claim brings formal timeframes and costs. If you need more time to get advice or find documents, ask for it in writing before the deadline. Reasonable requests for a short extension are usually granted.
Your first reply sets the tone
Keep your first reply short, polite and factual. Acknowledge the letter, say that you are considering it, and either ask for any documents you need or set out briefly why you disagree. Avoid emotional language, threats or long histories of the relationship. Anything you write may be shown to a court later.
If you accept that some money is owed, a reply can propose a payment plan without admitting the whole claim. The wording matters here, and it is a good place to have a lawyer help.
How these usually end
Most disputes that begin with a letter of demand are settled by negotiation. Court is expensive and slow for both sides, and a clear, early reply often makes it unnecessary. The usual outcomes are:
Payment in full, sometimes with a discount for paying quickly.
A payment plan over an agreed period.
A reduced amount, agreed to save both sides the cost of going further.
The claim withdrawn, if it turns out to be wrong.
Whatever is agreed, put it in writing and make sure it says the dispute is resolved once the terms are met.
If you think the claim is wrong
You don’t have to pay a claim you genuinely dispute. Reply explaining why, with the documents that support you. If the sender goes ahead and files a claim, you will have the chance to defend it, and in some cases to make a claim of your own.
When to call us
As soon as the letter arrives. A short meeting is usually enough to tell you how strong the claim is, what your options are and what your reply should say. We quote any further work before we start.
Your situation isn’t a short answer?
Rory Fitzgerald
A first meeting ends with a written plan and a fixed quote.
