A Guide to Letters of Demand

Seeking compensation from that rascal that rear-ended your beloved Mercedes? Trying to recover unpaid bills from a recalcitrant client that simply refuses to pay up?  It is always recommended to attempt to resolve these issues amicably if it’s possible.  If you want to preserve a meaningful business or personal relationship, you can try to negotiate on a settlement that favors both parties.

However, if you have exhausted all other options, and have no choice but to resort to engaging solicitors to help press this claim, one of the first steps your lawyer should do is to send the other party a letter of demand.  

What is a letter of demand?

Simply put, a letter of demand is a formal letter comprising a list of demands that the recipient must comply with, usually backed up by the threat of legal action by the sender should the recipient fails to comply.  Although anyone may write and send letters of demands by themselves, most people engage lawyers to do so on their behalf.  This is advantageous since your lawyers may be able to better advise you on the strength of your claim and any potential challenges the recipient may raise to it.

Moreover, a letter of demand that comes from a lawyer’s office can be intimidating enough for most people to comply as it usually demonstrates to your recipient your resolve to follow through on any threat of legal action.

Why should I send a letter of demand instead of just suing that fellow?

Firstly, sending a letter of demand gives the other party one final opportunity to resolve the problem by complying with your demands before you commence litigation.   As anyone who has been through a lawsuit can attest, litigation is a physically, emotionally, and financially draining process.  Thus, giving the recipient one last chance while making clear your intent to take legal action if he fails to comply may open the door for a mutually beneficial solution.  

Secondly, if the recipient chooses not to comply with the stated demands and you are forced to proceed to court with your claim, this letter of demand can be used as evidence to show the court that you have made an earnest attempt to settle the issue and recover any money owed.   

What should a letter of demand include?

An effective letter of demand should include the following information

1. Your (the claimant’s) identity, and the lawyer(s) and law firm acting on your behalf (do include contact details of your lawyers so that your recipient may respond to acknowledge e time, compliance, negotiate settlements, or seek clarification on your claims)
2. A brief summary on your claim, and the key facts on the incident(s) involved
3. What payments or actions that you are demanding from the recipient
4. A deadline for the above mentioned payments or actions (do give the recipient a reasonable time frame to comply with your demands)
5. Clear and unambiguous statement of any measures (including but not limited to initiating litigation) you will undertake against the recipient should he fail to comply
6. Copies of bills, invoices, or financial statements to serve as evidence for your claims

Help! I’ve received a letter of demand! What should I do now?

Letters bearing the letterheads of law firms rarely herald good news, and receiving a letter of demand is usually one of the first signs that you are facing impending legal troubles.  Unlike an ostrich, simply burying your head in the sand and ignoring the existence of the letter is not a viable solution, since a non-response may be interpreted as a denial of the claim, and the sender may be forced to take legal action against you.

Instead, do retain the letter of demand (and make copies of it if possible).  You should seek clarification with the sender if you are unclear on any matters or simply require further details.  You should then consider whether you wish to dispute the claim(s) set out in the letter.  

If you do wish to dispute the claim, you are strongly advised to seek legal advice.  However, if you do not wish to dispute the claim, you may simply comply with the demands set out on the letter, or contact the sender to negotiate a settlement with less harsh terms on a “without prejudice” basis.  Doing so will allow you (and the sender) to preserve your legal rights while negotiating, and allow you to take a different stance later on should the matter reach the court.

Do note that while the label “without prejudice” on your negotiation letters usually prevents your opposition from admitting them as evidence against you during discovery, this is subject to certain limitations (usually related to the context the letters were written in) , as the courts will consider the contents of the letter rather than the mere label of “without prejudice” when deciding its admissibility

I got A1 for O Level English, I got this!

You can actually write and send a letter of demand yourself, although it is recommended that you seek advice from a lawyer (and a letter of demand from a lawyer also carries additional clout). 

 If you wish to DIY a letter of demand, do take note of the following points

1. Adopt a polite but firm tone in your letter.  As sending a letter of demand is itself already a threat, there is little need to express additional hostility in the letter.  A polite tone will not only come across as more professional and serious, but also encourage the recipient to consider settling the matter rather than fighting it out in court (do consider adopting a more conciliatory tone if you and your recipient have long standing personal or business relationships that you wish to preserve)
2. Be very precise and clear on what exactly is your claim against the recipient, the action(s) or monies you are demanding from him, and the deadline for these actions.  Ambiguity in your letter is likely to delay any remedies you may receive since the recipient is much more likely to seek clarification first before considering complying.
3. Attach  copies of evidence that may bolster and support your claim.  For instance, if you are claiming for an unpaid bill, you should attach copies of any contract of sales, bills etc.  A well-substantiated claim is more likely to persuade your recipient to comply with your demands rather than fight a lost cause.
4. Only make threats that you are prepared to carry out.  If your recipient comes to the conclusion that you are merely posturing or making empty threats, he is far more likely to conclude that your claim is unmeritorious and can be simply dismissed.  
5. Retain  copies of your letter after sending it out for future reference.  If possible, have your letter sent to the recipient via registered post so that you will have evidence that your recipient has received your letter.  This will prevent the recipient from subsequently claiming in court that he did not receive it.
6. Refrain from engaging in any harassing behavior to further compel the recipient to respond to your letter.  Such actions would not only paint you in a bad light should your recipient decide to challenge your claim in court, but also potentially expose you to liabilities in counter-claims or actions under the Protection from Harassment Act
7. Be  open-minded towards any efforts on the part of your recipient to negotiate a settlement.  As civil litigation is a long, exhausting, and expensive business, even accepting a lower offer from your recipient will be in your mutual benefits.

Sending OR Receiving a letter of demand

If you have an outstanding claim that you wish to recover monetary repayment or damages for, or to demand someone to do (or cease to do) something, you are strongly advised to seek legal advice to evaluate the strength of your claim and discuss potential courses of action (unless the quantum involved is too insignificant to warrant engaging lawyers).  Sending a letter of demand will usually be the precursor to any subsequent legal action, but before you do so consider the following questions

1. What (and how much) exactly do I wish to claim from the recipients?
2. If the recipients dispute my claim, what are my odds of winning in court?
3. Are there any other means for me to achieve these aims without going through litigation?

If you decide to go ahead with the letter of demand, do consider if you wish to do it yourself (DIY) or engage lawyers to do so on your behalf

Conversely, if you do receive a letter of demand, do not panic!  Carefully ask yourself the following

1. What exactly is the sender claiming for? Should I contest the claim?
2. If I contest the claim, what are my odds of winning in court?
3. If I do not contest the claim, can I negotiate with the sender to get a fairer deal?

If you want to send a letter of demand but feel uncertain about the odds of winning or if you received a letter of demand but feel uncertain about how to contest the claim, you should definitely speak to a specialized lawyer. You can arrange for a Quick Consult and speak to an experienced lawyer for 15 minutes at $49.

Letters of demand can potentially lead to costly and contentious lawsuits. The first step in ensuring a smooth and conflict-free outcome is by arming yourself with knowledge and being aware of your legal position.

This article is written by Ho Yu Xuan.

This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.