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Top Tips for a Letter Of Demand

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A Letter of Demand is a critical tool in resolving disputes and recovering debts. It serves as a formal notice to the recipient, demanding that they fulfil a legal obligation, such as:

  • paying an outstanding debt
  • rectifying a breach of contract
  • delivering property

This article is written by an experienced Australian contract lawyer. It provides a comprehensive overview of how to draft an effective Letter of Demand, ensuring compliance with Australian legal standards.

Key Takeaways

  • A Letter of Demand is a formal notice used to resolve disputes before initiating legal proceedings
  • It must be factual, professional, and supported by evidence
  • Sending the letter via a traceable method is essential to confirm receipt
  • If the debtor fails to respond, legal proceedings may be the next step

What is a Letter of Demand?

A Letter of Demand is a formal document sent to a debtor, requesting them to fulfil their legal obligations. It is often the final step before initiating legal action and serves as evidence that the creditor has attempted to resolve the matter amicably.

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Steps to Writing a Letter of Demand

1. Identify the Parties

Clearly state:

  • your name or your company’s name
  • the recipient’s name and contact details
  • ensure consistency with any existing contracts or agreements (this is to ensure you avoid repudiating the contract)

2. State the Issue

Outline the problem in detail, including:

  • the nature of the issue (e.g., unpaid invoice, defective services, breach of contract)
  • relevant dates, amounts, and prior attempts to resolve the matter

3. Demand a Resolution

Specify:

  • the action required (e.g., payment, rectification of a problem)
  • a clear deadline for compliance
  • the exact amount owed, including any applicable interest

4. Outline the Consequences

Explain the potential outcomes if the demand is not met, such as:

  • initiating legal proceedings
  • reporting the matter to relevant authorities

5. Include Supporting Documents

Attach evidence to substantiate your claim, such as:

  • invoices
  • contracts or agreements
  • correspondence showing prior attempts to resolve the issue

6. Sign the Letter

End the letter with:

  • your signature
  • your name and title (if applicable)

7. Send the Letter

Use a traceable method, such as:

  • registered post
  • email with a read receipt

When to Send a Letter of Demand

A Letter of Demand should be sent after exhausting other avenues to recover the debt or resolve the issue. It is important to send reminder letters first, as non-payment may be due to an oversight or financial difficulties. Consider offering a payment plan if appropriate.

Benefits of a Letter of Demand

Sending a Letter of Demand has the following benefits:

  • Provides the debtor with a final opportunity to resolve the issue
  • Serves as evidence of attempts to settle the matter before legal action
  • Helps avoid costly and time-consuming litigation
  • Can preserve business relationships if handled professionally
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What Happens if the Debtor Doesn’t Respond?

If the debtor fails to respond within 7–21 days (a reasonable timeframe), you may consider:

  • initiating legal proceedings
  • exploring alternative dispute resolution methods
  • assessing whether the relationship with the debtor is worth preserving
  • sending a statutory demand

Frequently Asked Questions (FAQs)

Is a Letter of Demand legally binding?

No, it is not legally binding but serves as a formal notice and evidence of your intention to take further action if the issue is not resolved.

Yes, if you are entitled to claim interest under a contract or applicable legislation, you can include it in your demand.

It is recommended to send it via registered post or email with a read receipt to ensure proof of delivery.

Yes, but it is advisable to seek legal advice to ensure compliance with Australian laws and avoid potential pitfalls.

About the Author

Farrah Motley
Director of Prosper Law. Farrah founded Prosper online law firm in 2021. She wanted to create a better way of doing legal work and a better experience for customers of legal services.

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