The importantance of a letter of demand


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Why is a letter of demand important?

A letter of demand is a formal demand made of a party to do something or not do something.  It is generally sent as a final notice prior to a party issues legal proceeding.

The most common topic of a letter of demand regards the payment of debt.

However, a letter of demand can also seek that a party do something (e.g. to fulfil their end of an agreement) or seek that a party is prevented from doing something (e.g. stop a continuing breach of contract or licence).

Do I need to send a letter of demand?

There is no legal requirement to send a letter of demand before issuing legal proceedings against someone.  However, a Court or Tribunal will not take a favourable view if you have not taken reasonable steps to resolve a dispute, prior to issuing legal proceedings.

A letter of demand not only puts pressure on a party to remedy a situation early on, but it also demonstrates your intentions to resolve a matter amicably and without court or tribunal involvement.

When should a letter of demand be sent?

A letter of demand should only be sent when other attempts to seek payment or action or to cease action from a party or person have been ignored, such as when emails and telephone calls have been unreasonably ignored.

However, in some circumstances a letter of demand should be sent immediately.  For example, when there is no dispute as to a debt and the other party has indicated that they will not pay or if it is to urgently prevent damage or an event from occurring.

It is critical that the content of your letter of demand is carefully considered and drafted so as to ensure that you do not make admissions or derogate any of your rights.

If you require legal advice regarding a debt or dispute, including advice on sending a letter of demand, you should contact our litigation department on (03) 9311 8511.