Demand letters are typically the first step in a litigation file. These letters can demand payment of a debt, return of property, or specific performance. This guide is focused on demand letters in the civil law context and NOT the family law context.
Demand letters are meant to express your client’s position clearly and with firm language, while trying to encourage early resolution of the matter. For example, highlighting that your client is willing to forego an aspect of their claim if a certain amount is paid or certain performance occurs by a particular date.
Opposing counsel or party.
Indicate that the letter is sent WITHOUT PREJUDICE.
This is important to facilitate possible settlement conversations.
Inform the opposing party that you are retained with respect to the matter.
Typically, you can use the subject matter as the RE: Line for your letter and then simply refer to the above noted matter. Alternatively, you can define the matter. For example:
“RE: Breach of Contract with Company A (the “Matter”)
If the opposing party is unrepresented, indicate the following at the outset of your letter:
“As we only represent Company A, we cannot provide you any legal advice and strongly suggest you speak with a lawyer of your choosing regarding this matter.”
You will see in the example letter the above sentence is highlighted because you only need it if the recipient is an unrepresented party. If you are writing to a lawyer representing the opposing party, you do not need this sentence.
Highlight the relief your client is seeking.
This could be the specific performance or delivery of an asset paid for. Alternatively, your client could be seeking payment for their performance or delivery of an asset.
Note: if your client is seeking payment, ensure that you consider any interest that the client may be entitled to. Interest provisions may not necessarily be found in the contract itself but in the invoices. You must also note the last date of demand so that you do not find your client out of time due to the limitation period expiring.
Outline the reasons as to why your client is right in the law for making their demand.
Alternatively, you may find yourself having to outline why the opposing party is not correct in refusing performance or payment. Depending on the opposing party, you may need to give detailed legal authority as to why your client is in the right and entitled to the remedy they are seeking.
Provide a reasonable deadline to respond to the demand.
Typically, you will see between two weeks and a month as a reasonable deadline. Always bold the date at first reference so that the opposing party or their counsel see it clearly.
Explain your next steps in your concluding sentence.
Lawyers should not threaten legal action; we advise our clients of their options regarding the matter. Do not state to that, “If you do not pay the Amount by April 30, 2023, Company A will sue [you/your client].” Instead, state, “If the Amount has not been paid by April 30, 2023, we will advise our client of their options moving forward or we will seek instructions from our client on their next steps.” You use this language to indicate that you are not bluffing in the claim but do want to give them a chance to respond.
Sign off on the letter, clearly indicating that you are a lawyer (or articled student, as the case may be).
Do NOT end letters with the phrase, “Govern yourself accordingly”. This phrase is somewhat antiquated and unnecessarily inflammatory. If used at all, it should be reserved for situations in which the opposing party has acted particularly egregiously.
If the lawyer for the opposing party requests an extension to the deadline, do not unreasonably withhold the extension.
If you are close to a limitation period expiring, advise opposing counsel you will file the Notice of Civil Claim (if Supreme) or Notice of Claim (if Provincial Small Claims) to preserve your client’s interests but are still open to further discussion of a possible resolution.
Always provide your client the opportunity to review the letter before you send it out so that they are part of the process and aware of what is going on.