A letter of demand or LOD is a simple request for the recipient to take specific action, usually within a set time. Legal action can follow if the recipient doesn’t comply with the letter’s demands but doesn’t always necessarily follow.
Why send a letter of demand?
It’s a fair question, and the main reason to send a letter of demand is to warn the recipient of imminent legal action unless they take specific steps – usually payment of monies owed.
A letter of demand issued by a lawyer can have an almost magical effect and produce the desired result without the need to take the matter any further. The same letter sent by the claimant doesn’t always have this impact.
Avoiding litigation is always a plus, as it saves time and money. If the dispute ends in court, then a letter of demand acts as evidence that the claimant was reasonable and encouraged negotiation to try and settle the matter.
How to formulate a letter of demand
Because a letter of demand is not an official document of the court, the format of the letter is not prescribed. However, a letter of demand usually contains the following information:
- The name of the claimant.
- The details of their legal representative if they have one.
- The facts of the dispute.
- The nature of the claim against the letter’s recipient.
- The claimant’s remedies.
- A timeline that the recipient of the letter must follow.
Why a lawyer should write a letter of demand
First, a LOD produced by a private individual is not nearly as effective a weapon in getting someone to comply with a claim.
Using a lawyer who produces a document on headed paper demonstrates to the recipient that the claimant is taking the matter seriously enough to instruct a solicitor. Also, the claimant may proceed with legal action if their demands are not complied with.
Correct legal language and terminology
The second reason for paying a lawyer to draft a LOD is the use of the correct terminology; some keywords and phrases should appear, such as ‘without prejudice,’ ‘reserving rights,’ and ‘default.’
A person without legal knowledge or qualification could ironically prejudice their position if they start using legal phrases without knowing their true meaning, or understanding the implications.
Alternative forms of dispute resolution
Before writing a LOD, a lawyer will assess the case, its strengths and weaknesses, and offer invaluable advice to the claimant.
It could be their case is not particularly strong, and going to court may have an uncertain outcome or be long-winded and expensive.
Other forms of dispute resolution, like mediation, arbitration, and neutral evaluation, are an option, and an experienced litigation solicitor will be able to advise on these alternatives.
Any type of civil dispute is open to mediation at the Singapore Mediation Centre. Mediation is appropriate for entrenched, low-value claims that don’t merit litigation, but in which both sides are refusing to budge.
Mediation offers a neutral and objective forum to help both parties work towards a solution. A mediator acts as the neutral third party but cannot reach their own decision and compel parties to accept an outcome; they are just a facilitator.
Arbitration is more similar to litigation, and fees are attached for an arbitrator’s appointment. Usually, between one and three arbitrators are appointed depending on the dispute. However, in low-value cases, it is more common to have one.
Unlike mediation, where either or both parties can walk away from the process and choose to pursue the matter in court, an arbitrator makes a legally binding decision on both parties.
Neutral evaluation is a method used to stress test a case and estimate likely costs and charges if litigation is the chosen option. An evaluator gives an opinion on the relative merits of the case. The evaluator is usually a former judge or senior counsel.
The claim is presented somewhat like a court case, with legal representatives submitting evidence. The evaluator gives an opinion on the likely trial outcome.
A neutral evaluation can help break negotiations that are in a deadlock.
Writing a letter of demand
There is plenty of online guidance to help with both the content and the tone of a letter of demand. Here are some key pointers:
- Summarise the facts of the claim, keep it simple, and not a long-winded account that goes on for pages. If the summary does need to be detailed, then attach it in a separate document.
- Recounting events should be done in a logical and chronological order.
- Attach other relevant supporting documentation. This should be referred to in the body of the letter, but there is no need to recount what it says; just identify it.
- State the claim clearly and set a deadline for compliance.
- List sanctions for non-compliance with the letter; this may include litigation and/or other penalties/actions.
- Be polite and factual even if the dispute has become very heated. Keep the letter professional. This is more likely to elicit the correct response.
- Keep a copy of the letter and its attachments for future reference.
A letter of demand should ideally be sent by some form of courier service or registered mail so that the receipt is confirmed. It’s easy for the intended recipient to claim in court that they never received the letter.
Final thoughts on letters of demand
It’s easy to create an effective letter of demand with some online help, but it’s not so easy to evaluate the merits of your case or how much it might cost to win the argument in court.
An experienced legal professional lawyer can colour in the background, and it may be that another form of resolution is more appropriate and effective. Plus, a lawyer can advise on what happens next if the demands in the letter are not complied with.
Finally, a letter of demand from a lawyer can create an impact the same text written by a private individual or business often doesn’t have. This can resolve the matter there and then, so it’s usually money well spent.
Frequently asked questions
Is a letter of demand a formal legal document?
Although lawyers commonly send a demand letter, they are not a formal court document and don’t bind the sender to any course of action. If the recipient ignores a claim made in a LOD, the sender can opt to start legal proceedings, choose another course of action, or decide not to pursue the matter.
What does ‘without prejudice’ mean?
The phrase ‘without prejudice’ means literally, without prejudicing the legal rights of the person writing the letter despite the contents of the letter.
A LOD could contain an offer to repay the money in instalments and at a lower interest rate. Using the phrase ‘without prejudice’ means that if the letter’s recipient declines to comply, the issuer can still go to court and enforce their legal rights for repayment of the whole amount at the original interest rate without repeating the offer of staged payments.
‘Without prejudice’ communications can be complex, and this label needs to be used by an experienced lawyer.
Should I write my own letter of demand?
There is nothing to stop an individual or business from writing their own LOD. There are lots of online templates and guidance notes to help people include the correct information.
However, unless your case is very straightforward and clear-cut, a non-lawyer may not appreciate the legal issues that surround the dispute. You might end up threatening litigation for non-compliance within the terms of the letter, and this court action may not be financially or legally viable.
A lawyer doesn’t just write the LOD for you but can advise on the strengths and weaknesses of your case. It may be that another option could be more effective in achieving what you want.
Are there advantages to issuing a letter of demand?
A letter of demand is an excellent way to set out the claim and provide a clear record of the circumstances of the dispute.
A LOD is a fair warning to the recipient that consequences will follow if the claimant’s demands are unmet. Plus, it allows them to resolve the matter without the time, trouble, and cost of court action.
If the recipient responds to the letter, this can also provide helpful guidance to the claimant, and their legal representative about the possible defence the recipient intends to offer should the case go to court.
Because the claimant’s legal rights are protected, as stated in the letter, there is no disadvantage to issuing a LOD ahead of possible litigation, only advantages.
In what type of disputes are LODs most commonly used?
LODs are most commonly used in contractual disputes, where one party has failed to fulfil their obligations, and money is owed by one person or business to another.