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
If your car was damaged in a car accident and you believe that the other driver was at-fault, you may wish to make a claim against them to recover the cost of repairs and other losses. It is important to clearly communicate to the other party the amount you are claiming and that you believe they were at-fault.
By sending a simple letter setting out your claim, you may 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 the other driver to pay you the cost of repairing your vehicle.
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:
- you believe they were at-fault in the car accident
- the cost of repairing the damage to your car
- other losses you are claiming, such as hire car costs
- the date when you want them to pay you the money by
- how the money should be repaid, for example, by bank cheque or deposited into your bank account
- legal action may be started if the claim is not paid by the time specified in the letter
- they may be liable (responsible) to pay your costs and interest on the money claimed.
Once you have written the letter:
- make a copy to keep for your records
- send the original by post, fax or email, or hand it to the person
- keep a record of where, when and how you delivered the letter.
How the other party might respond
After the other party gets your letter of demand they may:
- agree with your claim and make arrangements to pay you
- deny they were at-fault, or say they were only partly at-fault
- 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 the other party has third party property or comprehensive insurance, they may decide to make a claim on their insurance policy. In that case, the other party should give you a claim number so you can contact their insurer directly.
If you cannot reach an agreement with the other party, you may need to decide whether to start a case in court. It is a good idea to try and resolve your dispute with the other party, before going to court. For more information, see Resolving your dispute.