The examples and perspective in this article may not represent a worldwide view of the subject. (December 2010)
A demand letter, or letter of demand (of payment), is a letter stating a legal claim (usually drafted by a lawyer) which makes a demand for restitution or performance of some obligation, owing to the recipients' alleged breach of contract, or for a legal wrong. Although demand letters are not legally required they are frequently used, especially in contract law, tort law, and commercial law cases. In some cases, evidence of attempts to settle are required before a court case will be accepted by the court, and demand letters are commonly used to fulfill this requirement. For example, if one anticipates a breach, it is advantageous to send a demand letter asserting that the other side appears to be in breach and requesting assurances of performances. Demand letters that are not responded to may constitute admissions by silence. Also, a demand letter will often generate a denial letter stating the basis for rejecting your side's claim (such as when the incorrect entity is sued), and is sometimes a good indication of what defenses will be raised if a suit is brought later.
Demand letters are sometimes used as a form of harassment and/or intimidation.
In personal injury claims, the settlement negotiation process begins by the victim submitting a demand letter to the insurance companies. The purpose of the demand letter is to present facts about the accident in order to persuade the insurance companies to provide adequate compensation. A typical demand letter is structured in the following manner:
- Description of the Accident
- Discussion of Accident Liability
- Description of Personal injuries
- Description of Medical treatments
- List of Medical Bills/Lost Income Statements
- Injury Settlement Demand
The personal injury demand letter is then sent to the insurance companies with supplemental documents that are referenced in the letter. This may include copies of accident reports, photographs of the accident/injuries, medical bills, doctor's statements etc.
The insurance company will then analyze the arguments made in the demand letter and respond with a counter settlement offer.
Under the law of the Netherlands, a natural person is protected by being granted a minimum period to pay. The law prescribes that a so-called "16-day letter" must be sent by a "professional creditor", in which the private individual is summoned to pay only the sum of the outstanding debt. The 16-day period in question is made up of one day for sending, one day for receiving and 14 days for studying the letter. According to these Dutch legal rules, demand letter should also include that if payment is not made within the 16-day period, statutory interest and collection costs may be claimed. The law of the Netherlands requires that the amount of interest and costs must be specified in the letter. If payment is not made within 16 days, legal proceedings can be initiated in which the creditor can claim the statutory interest and collection costs.
- "Creditor notices and letters of demand". Victoria Legal Aid. 15 October 2012. Retrieved 26 January 2017.
- "How to Take Someone to the Small Claims Court in the USA". Dispute. 2022-03-23. Retrieved 2022-05-17.
- "Responding to a Letter of Demand". www.litigant.com.au. Retrieved 2017-04-06.
- Fundamentals of Litigation for Paralegals by Marlene Maerowitz & Thomas Mauet. Eighth Edition.
- 15 U.S.C. § 1692g
- "Demand letters". www.justice.gouv.qc.ca. Retrieved 25 September 2016.
- "Debt collection in the Netherlands". www.dutch-law.com. Dutch Law Institute. Retrieved 25 April 2021.