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Demand Letters: What are they? What Happens if I Receive One?

Litigation

What is a demand letter? What are the benefits of a demand letter? What’s included in a demand letter? What happens after my demand letter is sent? What if I receive a demand letter? In this post, we answer these and other questions about demand letters. 

What is a demand letter?

A demand letter is an attempt to achieve a resolution to an issue without going to court. It is sent by certified mail and typically demands a specific resolution—a payment or some other specific action—by a specific date.

3 Reasons to Send a Demand Letter

A demand letter provides valuable benefits in a dispute or issue that seems likely to end in litigation. Here are three common reasons to send a demand letter.

1. A demand letter may prompt a response or resolution from the other party.

When a lawyer sends a demand letter on your behalf, it shows the other party that you’re serious and often motivates them to settle the issue instead of going to court. If you’ve been trying without success to resolve the issue on your own for a while, a demand letter might be all you need to get the needed response from the other party. 

2. A demand letter proves to the court that you’ve made an effort.

Courts tend to look favourably on a party that sends a demand letter. Sending a demand letter shows that you made an intentional effort to resolve the issue out of court. In some cases, sending a demand letter is actually a requirement before going to court. 

3. A demand letter can save you time and money.

There is a cost to having a lawyer draft and send a demand letter, but that cost is far less than the cost of litigation. Sending a demand letter and having your lawyer handle a settlement takes a lot less time than going to court, too. 

What is included in a demand letter?

A demand letter typically includes the following:

  • A brief history of the dispute and why you’re making the demand (e.g. legal justification or contract provision)
  • The demand—the specific action you want from the other party, and why
  • How the other party can respond to your demand (e.g. payment in full or incremental payments)
  • A deadline for the demand
  • Consequences of failing to comply with your demand

We discourage the use of antagonistic language or unreasonable demands in your letter for two reasons. First, threats, insults, or disparaging remarks rarely work in your favor with regard to motivating the other party to settle. Second, if your case goes to trial, the judge will read your demand letter. Your antagonism or unreasonable demands could work against you. 

What happens after a demand letter is sent?

If the recipient of your demand letter agrees to the terms in your letter, their agreement alone is not legally binding. If they agree to a schedule of payments or a lesser payment amount, you may wish to have them sign a promissory note or use an Accord and Satisfaction (or a Release of Liability) agreement. 

If the recipient of your demand letter fails to respond or refuses to agree to your terms, you must decide if you want to take the matter to court. If you choose to proceed with litigation, you’ll need to file a claim with the courts. 

What do I do if I receive a demand letter?

The first thing to do when you receive a demand letter is to contact your lawyer immediately. Your lawyer can assess whether the claim is well-founded, determine if the demand is reasonable, and advise you of your options.

It’s possible the demand letter is unjustified. The claim might be unfounded or unreasonable. If this is the case, you’re under no obligation to comply and the sender won’t have grounds for taking the matter to court. But it’s imperative to have a demand letter reviewed by a lawyer to ensure you know your rights and obligations.

Do not ignore the letter! Failure to respond puts you at risk of going to court. You can respond in a few ways, including:

  • Agreeing to the terms proposed in the letter
  • Negotiating a settlement with different terms
  • Stating your refusal to comply with the demand

Remember, if you receive a demand letter, the sender believes you’ve done something wrong and the letter is a final warning before they take legal action against you. The demand letter doesn’t automatically mean you’ll be taken to court. It’s an opportunity to resolve the issue outside of court. 

Legal Help for Demand Letters in Calgary and Strathmore

In Alberta, the Limitations Act states that you must file a claim within two years from the date on which you first knew or ought to have known of the injury or issue. If your limitation period is about to expire, a demand letter is not a good idea. You’re better off filing a claim to preserve your right to sue. 

If you wish to send a demand letter, or if you have received a demand letter, the lawyers at Getz Collins and Associates in Calgary and Strathmore can assist you. Contact us today

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