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Alternative Dispute ResolutionCommercial LawCommercial LitigationNewsPay me now – The benefits of sending a Letter of Demand

25 October 2021

A letter of demand is an effective and cost effective way of seeking the payment of an overdue account or the return of leased goods. While many companies, businesses or sole traders may attempt to send their own demand letters, engaging your lawyer to issue one on your behalf can be much more timely and effective for recovery of a long overdue debt.

A letter of demand should outline clearly and concisely to the addressee that you are demanding a payment or demanding an action be taken.

There are many instances where a letter of demand may be issued – maybe you have supplied goods or performed a service for an agreed fee, maybe you have leased commercial goods under an agreement, or maybe you have agreed to loan monies and have not been repaid in terms of any loan agreement.

Here are some of the benefits of your lawyer issuing a letter of demand on your behalf.

  1. Engaging your lawyer to issue a letter of demand can be more effective than issuing one yourself. It can foreshadow that if you do institute proceedings that you will be entitled to costs as well.
  2. A letter of demand can result in a positive outcome in a timely fashion. When a debtor receives a letter of demand from a law firm, demanding that they pay their overdue debt in a specified time period otherwise legal proceedings may be issued against them, it may entice the debtor will then pay their overdue debt. Often this can be more timely and efficient than continuing to chase them to no avail. Its well known that some debtors will avoid any demands until a legal letter is served on them.
  3. If the demand remains unmet, the matter may progress. A letter of demand often acts as a final reminder to resolve an issue, before legal proceedings are commenced. A letter of demand can provide this notice that if this issue is not resolved within a certain timeframe, you will consider taking the matter further. This is an effective approach to ensure the matter is resolved in a timely fashion, in an effort to avoid the need to progress it further. It can also be used in court, if the matter does not resolve, to prove that there were previous attempts to settle the dispute outside of litigation.

A letter of demand is a useful tool for settling a dispute without costing you the time and money associated with a legal battle. As a final warning letter, it communicates to the receiving party how serious you are about resolving the issue (if they fail to comply, they’ll face legal repercussions). Most importantly, if you do end up in court, a letter of demand can be used as evidence to prove you did everything in your power to come to a reasonable solution to your dispute before resorting to legal action.

Article written by Arizona Watson of our Brisbane office.