Letter of demand
A letter of demand is a letter to the other party asking for money to be paid. It warns the other party that if this is not done you may start a court case to recover the money they owe you.
Why send a letter of demand
It is important to clearly tell the other party that you believe they owe you money, and how much. They may have forgotten or not realised that they owed you money, or there could be some other misunderstanding.
By sending a simple letter setting out your claim, you might convince them to pay the money and therefore avoid the need to start a case in court. This will save you time and money. If you end up having to go to court, the letter is evidence of you asking for your money back.
If there is an Apprehended Violence Order (AVO) against you, protecting the other party or anyone they have a domestic relationship with, you should get legal advice before sending a letter of demand. Sending a letter of demand may be a breach of the AVO.
How to write a letter of demand
When writing your letter, make sure you include:
- the date
- your full name
- your contact details so the other party can respond to you, for example, your telephone or fax number, email or postal address.
Your letter of demand should tell the other party:
- they owe you money
- how much money is owed
- when the money should have been paid back, if the debt was due by a certain date
- the date when you want them to pay you the money by
- how the money should be repaid, for example in cash or deposited into your bank account
- legal action may be started if the debt is not repaid by the time specified in the letter
- they may be liable (responsible) to pay your costs and interest on the debt.
Once you have written the letter:
How the other party might respond
After the other party gets your letter of demand they might:
- admit they owe you the money and make arrangements to pay you
- deny they owe you the money
- ask for more information
- negotiate with you, by offering to pay you a lesser amount
- ask if you want to go to mediation
- do nothing.
If you cannot reach an agreement with the other party, you will need to decide whether to start a case in court. It is a good idea to try to resolve your dispute with the other party, before going to court. For more information, see Resolving your dispute.