Department of Justice is now the Department of Communities and Justice. Find out more >
A letter of demand is a letter from the other party asking for money to be paid. It often warns you that if this is not done they may start a court case to recover the money you owe them.
If you were in a car accident and the other driver believes it was your fault, they (or the owner of the car or their insurer) may send you a letter of demand. This might be the first time you find out that someone is claiming money from you.
A letter of demand will usually state:
You may receive the letter by registered post or email. The demand can also be made over the phone or in person. If the other party is insured, the letter of demand may be sent by their insurance company.
You can write a response to the letter of demand, explaining that you admit or deny their claim, offering to pay a different amount, or offering to pay the amount in instalments.
Sample: Response to a letter of demand – car accidents
When the other party receives your response, they will decide whether to accept your offer, put a counteroffer or take the case to court.
If you and the other party reach an agreement, you should record your agreement in writing.
For more information, see Put it in writing.
If you need help working out what payments you can afford, you may want to contact a financial counsellor. To find a free financial counsellor, see Financial Counsellor Search Tool on the Financial Rights Legal Centre website.
Be careful about what you write in your response to a letter of demand, as it could be used against you later if the case goes to court. Unless you want to admit fault, you should write "without prejudice" on your response. This means the response can't be used by the other party as evidence in Court. You can speak openly about the matter without the risk of the other party using that information against you later. If you are not sure how to respond to a letter of demand, you should get legal advice.