Articles

The Letter of Demand

The Letter of Demand

The Letter of Demand

Friday, 27 June 2014 18:45

By Stephen Chan

In dispute resolution and commercial litigation, whether the client is a multinational company or an aggrieved individual, usually the first physical piece of work you will see from your lawyer is a letter of demand to the other party.

Why is a letter of demand useful and important?

The letter of demand is quite likely the first opportunity you have to fully set out the facts (as you see them), tell the other side precisely what it is that you want and provide an opportunity for discussion and resolution.  The idea is to inform the other party what they are up against, and what consequences they face if the dispute remains unresolved.  

The letter of demand is useful even if the other party completely ignores it.

If the matter proceeds to court action, a good succinct letter of demand can form the foundation of a Statement of Claim.  Rather than there being any duplication of time, the exercise of drafting the Statement of Claim is reduced.

More importantly, a letter of demand forms part of the evidence of your case.  Many cases are determined on the basis of credibility of witnesses.  If a party completely ignores your letter of demand, but then concocts a defence at trial, the mere fact that the defence was not put forward at the earliest opportunity (i.e. by replying to the letter of demand) can be a factor in determining whether the defence is to be believed.

What sort of information do I need?

List of the most important dates relevant to your case (approximately month/year is sufficient in most cases).  What dates are important will differ from case to case but in most instances, you will want to identify:

•    When you and the other party first had contact;
•    The date on which any agreement was entered into (written or verbal);
•    The dates on which breakdown of the relationship occurred; and
•    Any other dates which may be relevant.

Collect all of the documents which support your claim.  This means any written agreements, email correspondences, text messages, notes or any other forms of written material.

Write down or mentally compose a list of what you want ideally to happen.  You may also want to consider a second list of what you would be prepared to accept as a compromise.

Summary

The letter of demand is an important tool for dispute resolution.  

A poorly crafted letter of demand can, at best, antagonise the other party by misstating facts, making unreasonable accusations and propose unacceptable solutions.  At worst, it can open a party up to counterclaims through inadvertent admissions.  

On the other hand, a well-crafted letter of demand can lay out the cards for all to see, provide a platform for dialogue between aggrieved parties and ultimately streamline the dispute resolution process.