A DEMAND LETTER FOR PAYMENT: WHAT IS IT?
- Isha Sharma
- Jul 24, 2023
- 3 min read
Written by Isha Sharma, a Law student
Introduction
Meaning
Demand letters are official letters that are issued from one person to another to settle a disagreement. The sender party may write one asking for money or some other action to make things right or resolve a grievance of some kind. The recipient could be in arrears financially, might have broken a contract, or might not have fulfilled a duty. Lawyers typically compose them. Demand letters are frequently used by displeased parties as a first resort before pursuing legal action.
Points to remember while drafting a demand letter for payment.
Although a brief letter is preferred, there is no set format for a demand letter. It simply needs to be as long as to make your intention clear. If it extends further than that, the letter's efficacy starts to suffer. Also, authors must be careful to stick to the facts.
The following are the key essentials that a demand letter for payment must contain:
· The reason for the letter
· The individuals concerned
· The occasion of the complaint
· A description of the losses suffered by the writer
· A demand for compensation
Usually demand letters include a deadline for the receiver to settle the conflict and any penalties the receiver may face for failing to comply with the sender's demands. It's crucial to take the letter's style into account. Be direct and genuine at all times. Any suggestion that the letter is making a threat to the receiver could cause problems.
Maintaining the highest level of professionalism in the demand letter shows that the author is thinking about filing a case. If the receiver doesn't reply, the sender may file a lawsuit. A poorly drafted demand letter—which is unprofessional, intimidating, deviates from the facts, and isn't succinct—can boomerang against you during the proceeding.
How Do You Respond to a Demand Letter?
It might be frightening to receive a demand letter, especially if it comes as a surprise. As a consequence, people may decide to discard or disregard a letter they receive. While that isn't unlawful, it's typically not a fine decision to do so. That's because it's typically considered a demonstration of bona fide faith from the sender to arrive at a settlement. You will likely be held accountable for your actions or lack thereof if the issue winds up in court.
One should take the time to carefully examine the letter to obtain the sender's perspective. Examine the information provided in the letter to make sure it is accurate. After you understand the sender's position, you might want to think about whether you should hire a lawyer to represent you. You are free to choose the stance you want to adopt. Do you wish to enter a settlement, make a counteroffer, maintain your stance, or proceed to court? Whichever course you choose, be sure to send a written reply to the sender. The letter must be through a certified medium, to obtain confirmation that it was delivered which can be taken as proof in the court of law later.
When to seek legal advice
After mailing a demand letter and not receiving a response, you may file a lawsuit in small claims court or seek legal advice from a personal injury attorney. In small claims court, you are still permitted to defend yourself without legal counsel. The benefit is that the defendant must show up in court. If they don't, you are awarded a judgment by default. Consider consulting an attorney if you're unclear about what to put in a demand letter, how to word it, or whether your case is solid and convincing.
Due to the long pendency of cases in the court, it is not very ideal to go to the court if the dispute can be settled outside the court. Most attorneys share your desire to settle outside of court. They'll draught a firm demand letter that might promote quicker payment or settlement because it comes from a lawyer's office and may seem more "genuine" to your adversary. If the lawyer's demand letter doesn't have the desired effect, they will let you know what your best next steps are.
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