Demand Letter

A Demand Letter is sent out to request payment or action, which is in default, from another party. It describes the payment or action that is being claimed and how it should be resolved.

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.