What a letter of demand should and should not say
The first letter in a civil dispute is the cheapest chance to end it. It is also the document the other side will read out later if it goes wrong.
General information, not legal advice. This page sets out how the law generally applies. It does not take account of your circumstances, and you should get advice about your own situation before acting on it. The official sources this page is written from are listed on it; where they differ from anything here, they are the authority.
A letter of demand sets out who you are, what is owed or what went wrong, why the other side is responsible, exactly what you want, and by when. Calm, specific and dated.
Leave out threats of criminal prosecution, abuse, deadlines you will not keep, and figures you cannot justify. Assume every line will be read by a magistrate.
What a letter of demand is for
A letter of demand is a written request that somebody do something — usually pay money, sometimes finish work, return property or stop doing something. It has no special legal status in New South Wales. You are not required to send one before commencing proceedings in most civil matters, and sending one does not stop a limitation period running.
Its value is practical rather than formal. It tells the other side you are serious, it gives them a chance to fix the problem before costs start, and it creates a dated record of what you asked for and when. A great many civil disputes end at this stage, which makes it by far the cheapest step in the whole process.
It also becomes evidence. If the matter does go to court, your letter and their reply go in front of the judicial officer. That is the reason for every piece of advice that follows.
Defamation is the exception to the general rule. Section 12B of the Defamation Act 2005 (NSW) requires a concerns notice to be given to the publisher before defamation proceedings are commenced, and the Act says what that notice must contain. See our page on defamation.
What belongs in it
Six things, in plain language. Nothing about a letter of demand needs to sound legal, and trying to sound legal tends to get in the way of saying what you want.
- Who you are, and who they are. Full legal names. If the other side is a company, name the company, not the shopfront or the person you dealt with.
- What happened. A short, factual account with dates. Two or three paragraphs is usually enough.
- Why they are responsible. The invoice that was not paid, the term of the agreement that was breached, the work that was not done. Point at the document.
- Exactly what you want. A specific amount, or a specific act. Compensation for my trouble is not a demand anybody can comply with.
- By when, and how. A reasonable date and a way to pay or respond.
- What happens if they do not. That you will consider commencing proceedings, if that is genuinely what you will do.
Attach the documents you are relying on. A letter with the invoice and the contract attached is far harder to ignore than one that refers to them.
What to leave out
Most of the damage done by letters of demand is done by lines the writer thought were forceful.
Do not threaten to report somebody to the police, or to have them charged, in order to get money. A civil debt and a criminal offence are different things, and mixing them is both ineffective and dangerous.
Do not abuse them, do not publish the dispute, and do not copy in their customers, their employer or their family. That can create a defamation claim against you out of a debt matter that was going well.
Do not set a deadline you are not going to act on. A letter that says seven days or proceedings will be commenced, followed by four months of silence, teaches the other side that your letters mean nothing.
Do not invent the figure. Claiming an amount you cannot justify from documents invites a dispute about the whole claim, and it can affect the costs order at the end even where you were largely right.
Getting the details right
Send it to the correct legal entity. If the other party is a company, the letter should name the company and go to its registered office as well as to the address you normally use. Demands sent to a trading name that does not exist as a legal entity are simply ignored, quite properly.
Send it in a way you can prove. Email is usually fine and is easy to evidence. Post is useful as well, and sending both is common. Keep a copy of exactly what you sent and the date you sent it.
Give a reasonable time to respond. What is reasonable depends on the matter: a small unpaid invoice is not the same as a complex dispute about defective building work where the other side will need to take advice.
Say whether the letter is open or without prejudice. An open letter can be shown to the court. A genuine settlement offer marked without prejudice generally cannot be, which is what allows parties to negotiate frankly. If you are not sure which you want, an open letter setting out the position, followed separately by any offer, is the safer structure.
Marking a letter without prejudice does not make it private, and it does not protect a letter that is simply a demand rather than a genuine attempt to settle. The label does not do the work; the content does.
What to do with the reply
If they pay, confirm receipt in writing and say clearly whether it settles the matter in full. A payment accepted without that confirmation can create arguments later about what was resolved.
If they dispute it, read what they actually say. A reply that raises a real point — the goods were faulty, the amount is wrong, the agreement was with a different entity — is information you needed before spending money on proceedings.
If they offer less, that is a negotiation, not an insult. Weigh what is offered against what running the claim would cost and what you would actually recover at the end.
If there is no reply at all, decide deliberately whether to proceed. One more letter is sometimes worth sending. Repeating the same demand indefinitely is not.
When to get a lawyer to write it
For a straightforward unpaid invoice, a clear letter you write yourself often works, and paying somebody to write it may not be proportionate.
It is worth getting help where the amount is significant, where the other side is represented or is a substantial business, where the facts are complicated, where a limitation period may be close, or where you think there is a real chance of proceedings. A letter written with the eventual pleading in mind says different things from one written only to demand.
It is also worth getting help before you send anything if you are angry. That is not a criticism. It is simply that a letter written on the day you were angriest cannot be unsent.
What usually happens
Gather the documents first
The agreement, the invoices, the correspondence and the dates. Write the letter from the file, not from memory, and attach what you rely on.
Confirm who you are dealing with
The full legal name of the person or company, and the right address. A demand addressed to an entity that does not exist achieves nothing.
Write it calmly and specifically
Facts, dates, the document that makes them responsible, the exact sum or act you want, and a reasonable date to respond by.
Send it in a provable way, and diarise the date
Email, post, or both. Keep a copy of exactly what was sent. Put the response date in your calendar and decide in advance what you will do if it passes.
Act on the reply, or on the silence
Confirm any payment in writing. Read a dispute properly. If you said you would commence proceedings and you meant it, do it or say why you are not.
Common questions
Do I have to send a letter of demand before going to court?
In most civil matters in New South Wales, no. It is not a precondition to commencing proceedings. It is usually worth doing anyway, because it can resolve the matter and because a court will want to see that a party behaved reasonably. Defamation is different: section 12B of the Defamation Act 2005 (NSW) requires a concerns notice before proceedings are commenced.
Does sending a letter stop the limitation period?
No. A letter of demand does not extend or pause a limitation period under the Limitation Act 1969 (NSW). If a deadline is close, sending a letter and waiting for a reply can use up time you do not have. Our guide to limitation periods in New South Wales explains how the clock works.
How long should I give them?
Long enough to be reasonable for the matter. For a small, clear debt a short period is normal. For a complex dispute where the other side will need advice, a very short deadline just produces a holding reply. Whatever you choose, be prepared to act when it passes.
Can I charge them interest and my costs in the letter?
You can claim interest where a contract provides for it, and a court has power to award interest. Legal costs are a matter for the court’s discretion and recovery is usually partial, so a letter that demands full costs as though they were automatic overstates the position. Claim what you can justify.
They ignored it completely. What now?
Then the decision is whether the claim is worth commencing. That turns on what you can prove, whether the other side can pay, and what each step will cost against the amount in dispute. Those three questions matter more than how unreasonable the silence feels.
Related
Before you send it
If a limitation period may be close, or the other side is already represented, it is worth a short conversation before the first letter goes out rather than after.