Letter of demand: when should they be used


letter of demand is an important step in setting out your view of a contract which you say has been contravene or in the debt recovery process.  Drafting a well crafted and concise letter of demand is important in improving its effectiveness and they are often deployed when a debtor has failed to pay your a debt or when you require something to be performed under a contract.

The below provides some key points highlighting the importance of using a letter of demand in a pre-litigation context:

  1. Formal Notice: It formally communicates your demand to the other party, whether it’s for payment, performance of an obligation under a contract, or ceasing certain actions.  This sets a clear expectation and timeline for compliance.
  2. Documentation: It creates a written record of your attempt to resolve the issue outside of legal proceedings.  This documentation can be important if the matter escalates to court or tribunal, demonstrating that you’ve taken reasonable steps to resolve the dispute.
  3. Pressure for Compliance: Sending a letter of demand often prompts the recipient to take the matter seriously and comply with your demands.  It emphasises the seriousness of the situation and the consequences of non-compliance.
  4. Preparation for Legal Action: While not always required, a letter of demand can be a precursor to initiating legal proceedings. Courts and tribunals typically expect parties to attempt resolution before involving them, and a letter of demand fulfills this requirement.  In Victoria, these obligations are codified in the Civil Procedure Act 2010.
  5. Clarity and Formality: By laying out your demands clearly and formally, a letter of demand reduces ambiguity and miscommunication.  It specifies what actions you expect the recipient to take and within what timeframe.
  6. Protecting Your Rights: Careful drafting ensures that your letter of demand does not inadvertently weaken your legal position.  It should avoid admissions that could harm your case and clearly state your rights and intentions.
  7. Direct: A letter of demand should be sent to the corporate officers of a company if the dispute relates to a corporate entity, such as a director of CEO.  This often evokes a better response than sending a reminder to the company’s accounts department as it brings it to the direct attention of the business owner or the ones who are in charge of business decisions and relationships with those external to the business.


In summary, while sending a letter of demand is not always mandatory before legal action, it is often a prudent and both time and cost effective step in resolving disputes.  It promotes clarity, documents your efforts to resolve the issue, and can exert pressure on the other party to comply, potentially avoiding costly and time-consuming litigation.

It is critical that the content of your letter of demand is carefully considered and drafted so as to ensure that you do not make admissions or derogate any of your rights.

Contact Kennedy Guy

We have solicitors who are able to assist with your letters of demand and pre-litigation queries and negotiations.  Please contact our Litigation department if you would like to know more via our ‘Enquire now’ button in the top right-hand corner or telephone (03) 9311 8511.