‘Demand letters’ are a formal legal document that is sent by one party to another party in an attempt to resolve a dispute. Businesses, municipalities, customers and service providers are all entitled to make an official request for outstanding payments, goods or services. Although demand letters can be used, more generally, to induce an action in order to settle a breach in contract or other disputes.
Demand letters are, usually, written up by lawyers and act as the final step of the aggrieved party before deciding to take more serious legal action against that recipient. Demand letters have become a very effective means of finding non-legal resolutions between parties and can help avoid incurring unnecessary legal costs. The letter will layout the initial agreement, dispute history, legal justification and demand a specific resolution by a predetermined date – under the threat of legal action.
5 Things You Should Know About Demand Letters
Now that you are caught-up on the basics, let us take a look at how demand letters are utilised to resolve disputes and how they can protect your business interests. Here are five things you should know about demand letters:
Demand letters show that you mean business
If your business is engaged in a financial dispute with another company or a customer, you want to show them that you are serious about resolving that dispute. However, the threat of legal action is much more affordable than taking them to court. A demand letter allows you to show the relevant recipient that you mean business and there will be consequences for not making payments.
Demand letters are recognised by the court
Although a demand letter is not as serious as a lawsuit, they are still recognised by the court as a good-faith attempt at resolving the issue and to not waste unnecessary court resources. Lawyers will often send proof of the demand letter and proof of receipt to show your genuine attempts to resolve the issue and in order to carry favour with representatives of the judicial system.
The content of a demand letter can be used in court proceedings
If the demand letter is unsuccessful in resolving the issue, usually due to the defending party refusing to take action, the case will be taken to court. The content of the demand letter is considered official and admissible in a court of law; meaning that you need be cautious in your wording, requests and detailing of the conflict. If you are reasonable and respectful in your demands, it will help build a stronger case.
Demand letters save you time, money and effort in the long run
Of course, as with any legal services, it will cost some money and take time to draft a demand letter, deliver it to the relevant party and provide evidence of the attempt at reconciliation to the court. However, when successful, demand letters are able to settle the dispute out of court and save you tons of money on time-consuming legal cases. Even unsuccessful attempts at dispute resolution are hugely beneficial to your court proceedings.
Always respond to demand letters
If you receive a demand letter – whatever you do – do not ignore it! You need to read it, understand it and call your lawyer, immediately. As we have mentioned, many recipients are tempted into ignoring demand letters in the hopes that they will just go away. This is, almost, never the case and even less likely if the dispute is for a large sum of money or a significant service provision.
Respond to the demand letter as soon as you can and attempt to resolve the issue out of court. The reverse is true of legal costs associated with demand letters. If you are found guilty of the claimant’s dispute, you can become liable for what was requested, additional damages, your legal fees and, possibly, theirs. Meet reasonable demands, meet deadlines and meet out of court – ensuring you respect the significance of a demand letter.
Why Are Demand Letters So Important?
It is important to have stages of escalating seriousness when it comes to settling disputes with other companies, customers and related parties. We need to have serious, but not quite legal, actions that we can take to protect our interests and the interests of our businesses. Demand letters allow people and organisations who have been wronged to show their intent to resolve the issue – without any expensive and time-consuming court cases.
At MarisIT , we are committed to protecting South Africans and their businesses from the threats of bad business dealings. We offer a range of services designed to draft and respond to final demand letters, detect and prevent fraud and keep your business safe and secure. For more information, contact MarisIT today.
