Demand Letter

A Demand Letter is a formal letter sent out by one party to request outstanding action or payment from another party.

Essentially, a demand letter sets out why the payment or action is being claimed, how it should be carried out (e.g. payment in full, payment over time), and directions for the reply and a deadline for the reply.

Demand letters are frequently used to maintain some goodwill between business parties and they often encourage payment, in order to avoid expensive litigation.

Most demand letters contain the 'threat' that if it is not adhered to, the next communication between the parties will be through a formal legal proceeding.

Demand letters can be used for the following situations: debt owed, NSF checks and stopped payment on a check.