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Letter of Demand: What you need to know

Have you ever received a Letter of Demand from a company, vendor or disgruntled employee asking for something? What should you do? Letters of Demand can be intimidating and create the fear of litigation.

 

What is a Letter of Demand?

A Letter of Demand (LOD) is a formal letter (usually drafted by a lawyer) setting out a list of demands for the recipient to comply with. Do note that an LOD is not a formal Court document that is required to commence legal proceedings. To commence legal proceedings, a Writ/ Originating Summons is filed with the Court and subsequently served onto the defendant.

The most common instances where a party may receive an LOD involves someone who believes that they are owed money, either based on a contract you had with them or because they believe that negligence or unlawful activity on your part has caused them to suffer a loss.

 

Purpose of LOD

While an LOD is not a prerequisite for the commencement of legal proceedings, it is usually sent to warn the recipient of the claimant’s intention to commence legal proceedings.

Sending an LOD can potentially save you legal costs – if the recipient complies with your demands. The cost of sending an LOD is much cheaper than the cost to commence legal proceedings. A well-considered and strongly worded letter from your solicitors may save you the considerable cost of commencing an action in Court.

 

Steps you should take if you receive an LOD

 

1. Do not ignore the Letter of Demand.

Ignoring it may complicate the matter.

 

2. Hire a Lawyer to help you respond to the LOD.

It is important to seek legal counsel when responding to an LOD. An experienced lawyer evaluates the merits of the LOD before drafting a response. Furthermore, a lawyer may aid you in settlement negotiations, Should the dispute advance, you will probably need a lawyer.

 

3. Respond to the LOD.

Respond to the LOD as this will communicate to the other party your position on the demands and how you wish to resolve the issue. It will also be seen as a sign of good faith should the matter end up going to trial.

 

Information that an LOD should have

An LOD should contain the following information:

  • Identity of the claimant and the law firm acting for the claimant
  • Matter in dispute and a summary of the material facts
  • Any payments, actions, or relief the claimant is seeking
  • Deadline by which the recipient must satisfy the demands, failing which legal action may be commenced
  • Measures that shall be taken by the claimant should the recipient fail to comply with the demands in the letter

 

Common terms and jargon used in an LOD

  • Without prejudice – Should the matter in dispute be brought to Court, the contents in the letter will be inadmissible as evidence.
  • Reserves his right – does not waive one’s right to commence legal proceedings
  • Alternative dispute resolution – alternative measures one can employ to resolve the dispute, instead of taking the matter to Court.

 

Cost involved in sending an LOD

The cost of sending an LOD can range from hundreds to several thousand dollars depending on the complexity of the matter and work involved to draft the LOD.

 

Why engage a law firm to send an LOD?

A qualified lawyer can properly assess the matter and evaluate whether there is merit in commencing legal action against the recipient while providing the possible causes of action available to you.

Furthermore, an LOD that is drafted by a law firm reflects your serious and strong intention to commence legal proceedings. The very fact that you have gone through the cost and trouble of engaging a law firm to send out the LOD may convince the debtor to reply and may be useful in getting the recipient to comply.

Please note that this article does not constitute express or implied legal advice, whether in whole or in part. If you require legal advice, please contact us at:  info@silvesterlegal.com.

 

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